paul baca professional court...

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PAUL BACA PROFESSIONAL COURT REPORTERS

1 ALBUQUERQUE BERNALILLO COUNTY

WATER UTILITY AUTHORITY

2 WEDNESDAY, APRIL 18, 2012 5:08 P.M.

3

ALBUQUERQUE BERNALILLO COUNTY GOVERNMENT CENTER

4 ONE CIVIC PLAZA, NW

ALBUQUERQUE, NM 87102

5

Before: Kelli A. Gallegos

6 PAUL BACA PROFESSIONAL COURT REPORTERS

500 Fourth Street, NW, Suite 105

7 Albuquerque, New Mexico 87102

8

9

10

A P P E A R A N C E S

11

12 COUNCILLOR KEN SANCHEZ, Chairman

13 COMMISSIONER WAYNE A. JOHNSON, Vice Chairman

14 MAYOR RICHARD BERRY, Member (Excused)

15 COUNCILLOR REY GARDUNO, Member

16 COMMISSIONER ART DE LA CRUZ, Member

17 COUNCILLOR TRUDY E. JONES, Member

18 COMMISSION MAGGIE HART STEBBINS, Member

19 TRUSTEE PABLO RAEL, Ex-officio Member (Excused)

20 MR. ROB PERRY, Admin. Officer, Alternate Member

21

22

23

24

25

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1 CHAIRMAN SANCHEZ: I'd like to call this meeting

2 to order on April the 18th of 2012, the meeting of the

3 Albuquerque Bernalillo County Water Utility Authority.

4 I'll let the record show that all members are present,

5 with the exception of Trustee Pablo Rael. He is

6 excused for this evening.

7 The next order of business will be a silent

8 invocation, followed by the Pledge of Allegiance,

9 which will be led by Rob Perry.

10 (Whereupon, there was a moment of silence.)

11 (Whereupon, the Pledge of Allegiance was led

12 by Mr. Rob Perry.)

13 CHAIRMAN SANCHEZ: And Councillor Garduno should

14 be here shortly.

15 The next order of business is the approval

16 of the minutes. I make a motion to approve the March

17 21st, 2012, minutes. We have a motion, and a second

18 by Commissioner De La Cruz. Any questions?

19 Seeing none, all those in favor signify by

20 saying yes.

21 ALL MEMBERS: Yes.

22 CHAIRMAN SANCHEZ: Opposed, no.

23 That carries unanimously.

24 (6-0 vote. Agenda Item 3 approved.)

25 CHAIRMAN SANCHEZ: Next item on the agenda is

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1 proclamations and awards, and it's Item A, quarterly

2 employee awards. And I would ask the recipients to

3 move to the front and get the awards, and wait to move

4 through the line of individuals. We've got Robert

5 Marquez. Please come to the podium. Magdalena

6 Bojorcas-Ponce, Joe Bailey, Lorraine Nunez, Floyd

7 Pena, Scott Salvas, and Richard Torres.

8 And we'll start with Robert Marquez. He

9 will be receiving a $250 award. And Robert's

10 dedication and personal excellence helped him become

11 the top call-taker for 2011 in customer service.

12 His attention to detail and willingness to resolve

13 customer service questions and inquiries efficiently

14 has placed his performance above all fellow team

15 members.

16 Robert, thank you very much for your effort.

17 COMMISSIONER DE LA CRUZ: Next we have Magdalena

18 Bojorcas-Ponce, who's going to be receiving $250.

19 Magdalena is the top call-taker for the fourth quarter

20 of 2011. Her attention to detail and willingness to

21 resolve customer questions and inquiries efficiently

22 has placed her performance above that of her fellow

23 team members.

24 CHAIRMAN SANCHEZ: Congratulations.

25 Next we have Joe Bailey. He is receiving

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1 $300 plus eight hours. Joe has significantly

2 increased the amount of compost sold. He goes out of

3 his way to resolve customer complaints and to keep the

4 public perception of the Water Authority beyond

5 reproach. Joe was instrumental in analyzing the 503

6 regulations and preparing the EPA annual report.

7 Mr. Bailey, congratulations for all your

8 work.

9 Lorraine Nunez will be receiving $500 plus

10 24 hours. Lorraine has taken an outdated contract

11 system for on-call construction work and turned it

12 into a system of several contracts bidding and

13 rotating the work assigned. This process is

14 innovative and saves time and money for the Water

15 Authority. This has allowed for a much quicker

16 response to water issues.

17 Lorraine Nunez, congratulations for all your

18 work.

19 The next recipient is Floyd Pena, it's $300

20 plus eight hours. Floyd assisted in the recent

21 customer service division Itron upgrade. The project

22 included an upgrade for software, disassembling the

23 old equipment and assembling and setup of all new

24 equipment, testing the upload and downloading

25 capacities. Floyd is dependable, trustworthy and is

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1 an extremely competent information technology resource

2 to the customer service division.

3 Thank you very much for your time and

4 service.

5 The next recipient is Scott Salvas. It's a

6 $250 award. Scott started assisting the water

7 reclamation plant and obtaining the emergency air

8 quality permit to operate the new Kangen engine and

9 the UV emergency generator. These two facilities are

10 vital to the effective operations of the plant. Scott

11 performed the required technical reviews, management

12 and operations of the plant. He is also -- the permit

13 was granted in 2011 thanks to the efforts of Mr.

14 Salvas.

15 Thank you very much.

16 Richard Torres is receiving $250 award.

17 Richard has excellent troubleshooting skills and

18 superior job knowledge. Richard caught on very

19 quickly to the advanced treatment process and goes out

20 of his way consistently to make sure the treatment

21 plant stays in compliance with the MPDES permit.

22 Richard had shown a strong work ethic and has a true

23 commitment to the success of the plant.

24 Richard, thank you very much for your time

25 energy.

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1 And let's have all of you come up and get a

2 congratulations from this authority. Again, to those

3 recipients, thank you for all of your work and effort,

4 and appreciate all your time in work for the Water

5 Authority.

6 Okay. The next item on the agenda is public

7 comment. Ms. Jenkins, how many individuals do we have

8 signed up to speak this evening.

9 MS. JENKINS: We have four signed up, Dave

10 McCoy, followed by Elaine Hebbard.

11 CHAIRMAN SANCHEZ: Okay. Once your name has

12 been called, you can come to the front. You will be

13 given two minutes to speak. A warning bell will go

14 off at one minute and thirty seconds, so let's have

15 you go ahead and proceed and come forward, please.

16 MR. MCCOY: Good evening. My name is Dave

17 McCoy, Citizen Action. Citizen Action invites the

18 Water Utility Authority to make clear its intentions

19 to the public my initiating a comprehensive emergency

20 response for the Kirtland Air Force jet fuel

21 contamination of Albuquerque's drinking.

22 The Water Utility Authority should make a

23 motion that would include the following: One,

24 recognize that an immediate full-scale emergency

25 response is necessary; two, the WUA will immediately

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1 retain at a nationally recognized expert to

2 independently evaluate what the City of Albuquerque

3 can do right to set in motion the necessary emergency

4 response plan; three, the emergency plan must be for

5 the purpose of pumping jet fuel out of the ground.

6 The focus of the WUA should be to stop the

7 movement of the liquid jet fuel plume before it

8 reaches a tipping point toward the Ridgecrest well so

9 that it can be remediated. A proposal for how to stop

10 the liquid jet fuel plume and an emergency plan of

11 action must be provided.

12 After 12 years of Air Force inaction for

13 characterization and remediation, two-thirds of the

14 jet fuel plume is within the city. No remediation or

15 protection for Albuquerque's wells is occurring. The

16 tipping point has already occurred for the dissolved

17 plume of ethylene dibromide that will reach and

18 contaminate Albuquerque's drinking wells.

19 Because the jet plume has left KAFB and

20 immediately threatens Albuquerque wells, the WUA as a

21 stakeholder, has a legal authority under the Hazardous

22 Waste Management Act to initiate the above independent

23 actions and pass the expense on to the Air Force.

24 Current operations at Kirtland are calling for more

25 planning, study and installation of 33 more monitoring

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1 wells that do not provide remediation. More

2 monitoring wells only allow the plume to travel

3 further towards KAFB Number 3 and Ridgecrest wells.

4 The Water Utility Authority should

5 categorically reject the risky proposed pump and treat

6 testing plan that will pull the liquid jet fuel more

7 toward the northern tipping point. I have some

8 handouts here with a little more detail.

9 CHAIRMAN SANCHEZ: Okay. Leave that with the

10 staff and they will hand it out to the members of the

11 commissioner.

12 MR. MCCOY: I did. Are there any questions?

13 CHAIRMAN SANCHEZ: Thank you.

14 Councillor Garduno.

15 Mr. McCoy, we have a question for you.

16 COUNCILLOR GARDUNO: Mr. McCoy, are you saying

17 that the Water Authority should be asking for another

18 study of this?

19 MR. MCCOY: No.

20 COUNCILLOR GARDUNO: I thought we already had

21 that.

22 MR. MCCOY: To. I'm saying that the Water

23 Utility Authority should make a motion that an

24 emergency response plan, boots on the ground,

25 equipment there yesterday, 24/7 drilling, you know

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1 should be made; that you need an independent expert of

2 international or national stature to conduct this,

3 and, if necessary, you might think about going to the

4 EPA and consider that option.

5 You know, nothing has happened here in 12

6 years. And there's been political compromise of the

7 New Mexico Environment Department, and there simply is

8 no removal of jet fuel occurring at the present time.

9 The liquid and the dissolve plume, they haven't run

10 the extractors for many months out there, even for the

11 dissolved portion, you know, the soil vapor in the

12 vadose zone.

13 So I think it's incumbent on the Water

14 Utility Authority to make a plan to take matters into

15 their own hands, as I described, specifically for the

16 purpose of getting the jet fuel out of the ground now,

17 and a plan be put in place. And Shaw is not providing

18 that right now. If you look at their contract, it

19 says their supposed to be doing continuous remediation

20 to the plume. They haven't provided continuous

21 remediation. And Water Utility should suggest that

22 that contract be no longer in place. They have

23 nothing in their remediation arsenal at the present

24 time to stop the jet fuel plume. So the Authority

25 should urge cancellation of that contract and get

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1 their own expert on board. This plume is within the

2 city right now, you know, and we can't afford to have

3 those wells shut down and that's only plan that's in

4 place at the moment, if the contamination hits. And,

5 you know, where's the water treatment plant? Nothing

6 is on board to protect the citizens and the City of

7 Albuquerque from what is an impending disaster.

8 COUNCILLOR GARDUNO: Mr. Chair, if I may.

9 Mr. McCoy, we will be having a presentation,

10 as I understand it, according to the agenda, by

11 Kirtland Air Force Base remediation status report.

12 Are you saying that that may not be up to date or

13 won't be...

14 MR. MCCOY: What I'm saying is that we've got

15 plans for more plans, we have plans for more studies,

16 we have study after study, we have plans that have

17 been rejected by the New Mexico Environment

18 Department, we've had plans that have been approved,

19 but there's nothing out there that's removing the jet

20 fuel. You know, it's not happening.

21 And more studies -- and I understand, you

22 know, it's good intentions to find out how far that

23 plume has gone. But you're putting in 33 more

24 monitoring wells when you know that plume is going to

25 hit. A dissolve plume; it moves with the groundwater.

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1 There's no way of stopping it. It's a mile long, a

2 half a mile wide and it's very thick and it's at a

3 deep depth and it's dissolve. So it's moving with the

4 groundwater and question is: What are you doing now

5 to stop this, the liquid portion at least? And that's

6 not occurring. And by the time they get and approved

7 plan, a final remediation plan, we're looking at

8 2014, 2015. Who knows how long it's going to take for

9 this plume to reach your wells.

10 And if that liquid plume hits a tipping

11 point, like the dissolve plume already has, you're

12 going to be in big trouble. You're not going to save

13 any of those wells out there, and you're going to lose

14 your wells to the north potentially, in addition to

15 the Ridgecrest wells.

16 So what I'm saying is, plans and studies and

17 all that are not going to get it. What you need is an

18 emergency response right now. You need a really -- an

19 environmental expert that can tell you what that

20 emergency response plan needs to be and it needs to be

21 put into effect. And the Water Utility Authority

22 needs to demand that these state and federal agencies

23 cooperate in this. And if you can't get that

24 cooperation, then you need to go upstairs to the EPA

25 or something, you know.

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1 I mean, this is serious stuff. And you're

2 out of time on it, you're out of time. You've had

3 studies, you've had the opportunity for studies to be

4 done since 1997, when they discovered this. And

5 you're not getting the removal of jet fuel from

6 sitting on your aquifer.

7 COUNCILLOR GARDUNO: Mr. Chair.

8 Thank you, Mr. McCoy.

9 I really believe that when we have that

10 presentation, those are certainly some of the

11 questions that I'd like to ask, and I'd like to

12 reserve that.

13 CHAIRMAN SANCHEZ: Okay. Let's go on to the

14 next speaker.

15 Mr. McCoy, thank you for your time.

16 MS. JENKINS: Elaine Hebbard, followed by

17 Willard Hunter.

18 MS. HEBBARD: Good afternoon. I'm here to talk

19 about the item on the drought management strategy.

20 I'm asking that it be postponed, any action on it.

21 Right now, on Item 10B, you'll see there's and item

22 developing a water conservation plan for the next ten

23 years. Drought management is a part of conservation,

24 and I would ask that you it would be part and parcel

25 of the topics that would be included in developing a

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1 water conservation plan for the next ten years.

2 Furthermore, there are some real problems

3 with the indicators that have been chosen, both the

4 gallons per capita per day and the annual operation

5 plan. There are, for example, with the last one,

6 annual operation plan that just finished up last

7 month, we pumped two and a half times more than what

8 we said we were going to, even knowing that we were

9 going into a La Nina year with potential curtailment.

10 So using those two things as indicators

11 probably are not real robust. I would suggest

12 probably following the permit that was given to the

13 Water Utility for water flows which would be a more

14 robust one because it actually limits you by cubic

15 feet per second. Another one would be with a water

16 pumping plan. And I think that what Mr. McCoy just

17 talked about, with the jet fuels, we're going to need

18 to have a water pumping plan as to how much you can

19 withdraw from various well fields.

20 So, again, I would like to suggest that

21 matter be postponed, that included in those topics

22 would be dealing with the water budget so you can have

23 some scenarios, and it's in keeping with the public

24 policy, part of the water management strategies. I'd

25 be delighted also to help in the design of those

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1 workshops.

2 Thanks. Any questions?



5 COUNCILLOR GARDUNO: Ms. Hebbard, are you saying

6 that there's a possibility of causing permanent damage

7 to the aquifer if we continue doing what we're doing?

8 MS. HEBBARD: Yes. I think that we have the

9 best intentions right now, but that if we had a plan

10 that said okay, we want to be withdrawing from these

11 various wells, and it's actually sort of a planned

12 response strategy rather than ad hoc, which it appears

13 to be right now, would be more in keeping. And that,

14 you could utilize the water budget model that you

15 have, I think. I haven't actually seen the budget

16 model itself. It was developed in-house for in-house

17 use. And I think that it would be great to take it

18 out to the public, and especially to this jet fuel,

19 and show people what some of those strategies might

20 be, so that you can help allay some of those fears.


22 Also on that, I thought that the

23 administration, or certainly -- Mr. Sanchez, there had

24 been some agreement that we would go out to the public

25 and certainly, you know, have this discussion.

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1 MS. HEBBARD: Well, and I think there. Sorry.

2 MR. SANCHEZ: Mr. Chairman, Councillor Garduno,

3 that, in fact, is also on the agenda. Katherine Yuhas

4 will report on that later on your agenda. And she'll

5 also discuss some of the issues Ms. Hebbard is

6 raising, which we disagree with.

7 COUNCILLOR GARDUNO: Anxious to hear that.

8 Thank you, Mr. Chair.

9 CHAIRMAN SANCHEZ: Thank you, Ms. Hebbard.

10 MS. HEBBARD: It's hard to explain all of them

11 when you've got two minutes.

12 CHAIRMAN SANCHEZ: Next speaker, Ms. Jenkins.

13 MS. JENKINS: Willard Hunter, followed by

14 Geraldine Amato.

15 CHAIRMAN SANCHEZ: Mr. Hunter, welcome.

16 MR. HUNTER: Good evening. My name is Willard

17 Hunter, and I want to talk about a national security

18 issue tonight involving this Water Authority although

19 board. Specifically I'm talking about the Kirtland

20 Air Force Base jet fuel leak threatening the security

21 of our community. It is the largest underground jet

22 fuel spill in U.S. history. The Air Force has known

23 about this problem for more than a decade and has done

24 little. The Air Force and NMED have been dancing

25 together for years; that type has passed.

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1 The quality of drinking water for a

2 significant portion of Albuquerque is threatened by

3 chemical contamination from this Air Force leak. You,

4 the Water Utility Authority board need to act now. In

5 the Air Force meetings I've attended, there seems to

6 be a little sense of urgency. I've seen lots of fancy

7 charts and future plans. Well, that time has passed.

8 We need action.

9 And OSHA website reported a woman ingested

10 four and a half milliliters, not much, of ethylene

11 dibromide and died after experiencing vomiting and

12 nausea, diarrhea and kidney failure. At autopsy,

13 massive liver and kidney damage was seen. And that is

14 one chemical approaching the Ridgecrest wells. If you

15 know a tsunami is coming, you take action. Well, an

16 environmental tsunami is coming and you know it.

17 There is a national security threat right here in

18 river city. It has been caused by the continuing

19 negligence of Kirtland Air Force Base management over

20 the decades. This is an emergency.

21 You are the Water Authority board and you

22 need to exercise your authority. Thank you.


24 MS. JENKINS: Geraldine Amato.

25 CHAIRMAN SANCHEZ: Welcome, Ms. Amato.

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1 MS. AMATO: I wish to affirm what attorney Dave

2 McCoy spoke of, as well as the previous speaker. And

3 it also references what's not being done with the

4 Sandia Lab unlined chemical nuclear waste dump. There

5 should be immediate excavation, not millions of

6 studies and nothing being done. It's like an inertia

7 but plenty of words. And typical of this area here,

8 the top front page of the Albuquerque Journal will

9 feature pigeons and mention in there that pigeon

10 droppings are polluting the storm water going to the

11 river. Well, this story won't get the top front page

12 of the Albuquerque Journal because there's an inertia

13 there. And it difficult for a local government, who's

14 actually a subsidiary of the federal government to

15 tells the feds anything.

16 Something needs to be done. There has to be

17 an open uprising I think to get anything done when

18 federal officials refuse to move. There has to be

19 people within the federal bureaucracy as well willing

20 to risk their jobs in order to save their lives. This

21 area here is becoming overwhelmingly polluted with

22 chemical and industrial nuclear both water and in the

23 air and in the land.

24 And as far and pigeons are concerned, we

25 should bring them back in. All over the world they're

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1 used as a resource. They're a domesticated bird

2 thrown away. If you give them a place to roost those

3 droppings can be used for fertilizer.

4 And instead of discouraging people from

5 having gardens here and watering every day to keep

6 food growing on their premises, we should be

7 encouraging people to water gardens. And it seems to

8 me, if these moisture going up towards a cloud that

9 might have some, there could siphon some little more

10 rain down. If you just have concrete and asphalt

11 burning in the sun and the heat going up there, if

12 there is any water in those aboveground clouds,

13 they'll just evaporate.

14 And then we have chemicals on the golf

15 courses. They water it, but they also overdose it

16 with chemicals and herbicides. And those things are

17 not being monitored either.

18 CHAIRMAN SANCHEZ: Thank you, Ms. Amato.

19 MS. AMATO: And you're stingy, Mr. Sanchez.

20 CHAIRMAN SANCHEZ: Your time is up.

21 MS. AMATO: Four people lined up to speak and

22 you give them a measly two minutes. You're a rude

23 person, and arrogant person and a disrespectful

24 person.

25 CHAIRMAN SANCHEZ: Thank you, Ms. Amato. Your

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1 time is up.

2 MS. AMATO: And you shouldn't even be the chair

3 of such an agency here.

4 CHAIRMAN SANCHEZ: You're welcome. Thank you.

5 Next item on the agenda is announcements and

6 communications. Item A is the next scheduled meeting,

7 which is May 23rd of 2012 at 5:00 p.m.

8 And Item B, we have a 2011 water quality

9 report, which will be given by Jane DeRose Baman. And

10 she is here to say a few words.

11 Welcome.

12 MS. BAMAN: Chairman Sanchez, Members of the

13 Board, my name is Jane DeRose Baman. I'm the Water

14 Authority's program manager for water quality. And

15 I'm just here to announce that we did issue our water

16 quality report for 2011. It was mailed earlier this

17 month to our water service customers, nearly 200,000,

18 and it's based on a mandate by EPA to issue a consumer

19 confidence report. So sometimes it's referred to as

20 that.

21 And information about the report as well as

22 other monitoring we've done is available on our

23 website, the Water Authority website, as well as we

24 would appreciate questions from our customers to

25 directed to our water quality information line, which

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1 is (505) 857-8260.

2 Also I have for those of you who did not

3 receive one or if you would like another copy, we have

4 extra copies on the back table.


6 Are there any questions?

7 Thank you for your time.

8 MS. BAMAN: Thank you.

9 CHAIRMAN SANCHEZ: The next item on the agenda

10 are introductions, and it will be the first reading of

11 the legislation, and that is going to be Item A, WUA

12 R-12-9, establishing one-year objectives for the Water

13 Utility Authority in fiscal year 2013 to meet the

14 five-year goals. And Frank Roth will be making that

15 presentation.

16 MR. ROTH: Mr. Chair, Members of the Board, the

17 FY13 goals and objectives are a part of the Water

18 Authority's strategic planning, budgeting and

19 improvement process, which includes long-range goals,

20 short-term objectives, performance measures, and the

21 Water Authority's participation in the American Water

22 Works Qual-Serve program, which includes benchmarking

23 with other utilities on operations and service

24 delivery, gathering employees' opinions about the

25 operations through a self-assessment, and lastly,

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1 through the peer review, and on-site, in-depth review

2 of the Utility's operations by a team of professional

3 volunteers trained in this program.

4 This diagram illustrates the improvement

5 process. It starts with the five-year goals and

6 one-year operatives which are integrated and aligned

7 with the matrix in the performance plan which helps

8 guide the operating budget.

9 Also, every two years we do a customer

10 opinion survey with questions that are tied directly

11 to the matrix in the performance plan. As I mentioned

12 earlier, the Water Authority participates in the three

13 Qual-Serve programs. We also receive external input

14 from the customer advisory committee and internal

15 input from the asset management steering committee to

16 help drive our agenda for improvement, and also to

17 fulfill the Water Authority's mission.

18 The five-year goals include guiding goal

19 statements, which describe the long-term desired

20 outcome in each goal area. And to measure the

21 progress in each goal area, we have performance

22 measures, 25 in all, to show us where we are and where

23 we want to go.

24 So with the performance objectives in front

25 of you tonight, they are tied, as I mentioned earlier,

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1 to our performance measures. They identify

2 performance gaps in operations and service delivery

3 when we benchmark with other utilities. We address

4 those performance gaps through the budget process by

5 allocating and prioritizing resources and then develop

6 improvement processes in order to be more efficient

7 and effective in our operations and service delivery.

8 And these are the one-year objectives, which are

9 policy directives from the board to help address those

10 performance gaps identified during the benchmarking

11 process.

12 So the FY13 objectives, there's 46 in the

13 five goal areas. They show implementation of plans

14 and programs that the Water Authority is working on.

15 They incorporate areas in improvement identified in

16 the Qual-Serve process. They are integrated with the

17 performance plan, as I mentioned earlier, with the

18 performance identified through the benchmarking

19 process, and some are carryovers from this fiscal

20 years and our past fiscal years as many of the plans

21 or programs are done in phases. Or if we're doing

22 operational improvement, we only set targets for each

23 year to reach a certain level of performance.

24 So I thought it would be good to show just a

25 couple of examples of how the objectives and

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1 performance measures are tied together, so I picked

2 the water supply and operations goal. Here you can

3 see that we have a few objectives related to plan

4 maintenance to increase our plan maintenance, our

5 groundwater and surface water facilities, as compared

6 to total maintenance or the plan maintenance to

7 corrective maintenance ratio. And this is tied to our

8 plan maintenance ratio performance measure, these two

9 objectives.

10 Another one is to maintain water use at 150

11 gallons per capita, which obtaining community input on

12 setting a new reduction goal. And this is tied to the

13 water conservation saving performance measure. And

14 also Katherine Yuhas will be talking about this later

15 in the meeting.

16 Two other objectives I'd like to point out

17 are reducing water loss through our leak detection

18 program. This is tied to our water loss and water

19 integrity performance measures. So we have objectives

20 to reduce water loss in our small diameter system

21 using our different leak detection methodology, and

22 then also next year conduct a pilot project on looking

23 at different methodologies on our large diameter water

24 lines. So these are just a few examples of the

25 objectives that are being introduced and how they're

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1 tied to our performance measures.

2 And so in summary, through our performance

3 improvement process, it includes the five-year goals

4 and one-year objectives with the objectives and

5 performance measures measuring our progress along the

6 way in each of the goal areas and to help guide the

7 budget process, which is the next agenda item, unless

8 you have any questions.

9 CHAIRMAN SANCHEZ: Are there any questions?

10 Seeing none, thank you for your time.

11 Next item on the agenda for introductions is

12 Item B, WUA R-12-10. That is appropriating funds for

13 operating the water authority for fiscal year

14 beginning July 1 of 2012 and ending June 30th of 2013.

15 Mr. Sanchez.

16 MR. SANCHEZ: Mr. Chairman, Members of the

17 Board, I'll cover Items B and C, the operating and

18 capital, with your permission.

19 I won't dwell on the budgeting process since

20 Frank Roth just explained that to you.

21 In terms of the highlights, first and

22 foremost, no rate increases proposed or incorporated

23 into this budget document. That includes a 2 percent

24 step adjustment for employees, based on existing

25 collective bargaining agreements. $2 million is added

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1 to our rate reserve fund, which, if you recall, for

2 those of you have been on the board for some time, it

3 is intended to be there as a safety valve in the event

4 of huge revenue fluctuations or as an attempt to

5 postpone rate adjustments.

6 Thirty million is for our CIP basic rehab

7 program, three million for our non-basic capital

8 projects. It continues the board approved

9 conservation surcharge for high residential water

10 users, which represent the top 7 percent of our

11 customers. It also includes a 30 percent discount to

12 residential customer using 150 percent of less of

13 their conservation average.

14 In terms of our assumptions, nominal growth

15 in the surface area. We're assuming a 2 percent

16 decrease in consumption based on conservation. Growth

17 and operating expenses include only essential items.

18 Increased capital spending for our south side

19 reclamation plan going forward. In terms of comparing

20 FY12 and FY13 that's before you, revenue increases by

21 about 1.1 -- decreases, actually, by $1.1 million,

22 from sixth-tenths of 1 percent. Expenditures go up by

23 four million, or by 2.2 percent. At the end of FY13,

24 we project to have $10 million fund balance. In FY12,

25 we ended up with a $2.2 million fund balance, which

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1 was due in large part to expenses to bringing the San

2 Juan Chama project online.

3 In terms of expenditures, personnel, the

4 2 percent step adjustment cost about $452,000. Eleven

5 -- FY12 midyear position annualized, $645,000.

6 Operating expenditures, increase in barricade and

7 paving cost, about $2.1 million. And $700,000 to

8 improve the actual costs for postage, filing of liens,

9 training and unemployment compensation.

10 In terms of internal services and transfers,

11 our debt service cost increased by $5 million and UEC

12 transfer to CIP for three million for growth=related

13 projects. And that's essentially reimbursing

14 developers who have fronted the cost of utility

15 extensions that are development agreements. As others

16 connect to that, we receive revenues from that and

17 transfer that into that fund.

18 In terms of a pie chart about how our

19 revenues are derived, interest of about $750,000;

20 miscellaneous revenue of 1.8 million, which includes

21 things like sale of compost, connection fees, not UECs

22 but the fees themselves; water revenue of 83 million;

23 water resources management of 4.5 million, which is a

24 dedicated conservation part of our rate; sewer revenue

25 of 62 million; CIP employees, which is a transfer of

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1 $650,000; solid waste transfer of 1.1 million, which

2 is the solid waste contribution for the Water

3 Authority sending its billing and staff-related costs

4 and collections; franchise revenue of about 7.1

5 million; and San Juan Chama related rate of 30

6 million. So the total is $191million.

7 In terms of how that breaks down to

8 expenses, debt service to the largest component, $66

9 million; wages and benefits, 47 million; operating

10 expense, 45 million; transfer to other funds,

11 8.2 million; franchise fee, approximately 6.5 million;

12 risk charges, 3.2 million; other, which is fuels,

13 radio and other capital, 2.3 million; indirect

14 overhead paid to the city, 1.5 million; workers'

15 compensation, 754 million, for the total 181 million,

16 plus the fund balance of 10 million gives you the 191

17 in terms of the revenues.

18 In terms of our finance plan going forward,

19 you can see 2013 highlighted. That tracks with the

20 numbers we just provided. Going forward into about

21 2017 through 2021, you can see that our fund balance

22 falls below one-twelfth. Last year, the board

23 approved in our rate ordinance having one-twelfth as

24 our fund balance target as opposed to $10 million or 7

25 to 8 percent. And the rating agencies lately have

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1 said, "You really need to shore up that fund balance."

2 So you can tell going forward, with nothing changing,

3 our fund balance starts to fall far below the

4 one-twelfth.

5 In terms of CIP, there's an appropriation of

6 42 million, 33 million for our basic water and sewer

7 program, 30 million is for rehab and replacement, two

8 million is for implementing a financial ERP system

9 going forward in FY14, three million for special

10 project, two million of that is for automated meter

11 infrastructure, starting the phases going forward, one

12 million is for steel line replacement, four million is

13 to close out the San Juan Chama project, 2.3 million

14 for the surface water treatment plant, and 1.7 million

15 for habitat restoration of the bosque that's required

16 as part of our permit.

17 In terms of CIP planned spending,

18 9.9 million for basic pipe renewal, 5.1 million for

19 basic plant renewal, three million for growth

20 projects, two million for the financial enterprise

21 system, 15 million for the south side water

22 reclamation plant, one million for steel line

23 replacement, four million for special projects and two

24 million for the automated meter infrastructure, for

25 the total of $42 million.

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1 Going forward, some of our financial

2 challenges are the substantial improvements we need to

3 make at the south side reclamation facility. We've

4 talked about an estimate of $250 million over the next

5 decade to get our plant up to where it needs to be to

6 be fully compliant with our discharge permit, EPA

7 regulations and certainly the Isleta Pueblo

8 expectations that we meet their conditions for that

9 water use. Also increasing and maintaining our

10 reserve to one-twelfth as opposed to 7 to 8 percent.

11 The increasing cost of power, fuel and chemicals are a

12 constant challenge because they tend to rise at double

13 digits. And also financing our asset management plan,

14 Dave Price soon will talk about where our CIP spending

15 needs to be. Historically, we've been about 41, $42

16 million, and we really need to be in the 71 plus

17 million dollars annually, not only to take care of our

18 backlog, but to stay in front of the risk going

19 forward of our capital infrastructure.

20 At this point, I'd like to call up Dave

21 Price. He's the chief engineer responsible for our

22 capital program. After Dave, Paul Cassidy will talk

23 about bonding ratings and the expectations. And then

24 I'll close with what we project going forward.

25 MR. PRICE: Mr. Chairman, Board Members, my name

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1 is David Price. I'm the manager of the water

2 resources planning and engineering division for the

3 Water Authority.

4 I'm going to talk a little bit about our

5 asset management plan and the CIP program. First I

6 want to talk about what assets we're talking about.

7 The drinking water assets, they include the San Juan

8 Chama drinking water plant, our wells, booster pumping

9 stations, reservoirs, water pipelines. Wastewater

10 assets includes the sewage collection pipelines,

11 sewerage lift and vacuum stations, the south side

12 water reclamation plant and our soil amendment

13 facility.

14 Other assets include the reclaimed water

15 assets. We have a north side nonpotable water system

16 that's been in service for almost a decade now. And

17 we're just completing the construction startup of the

18 south side nonpotable water system that will be

19 treating the effluent from the wastewater plant,

20 filtering it, disinfecting it and allowing it to be

21 used for parks in the southeast portion of the city.

22 The compliance division also has assets

23 including the analytic laboratory and the south side

24 water reclamation plant, and also they have a small

25 process laboratory up at the San Juan Chama water

5cbb4603-a9e9-463d-a599-2589072391b5


1 treatment plant.

2 You might recall at last April's board

3 meeting, Mr. Stomp presented the asset management plan

4 that was developed by for the Water Authority by our

5 consultant, GHD. This plan, this study went on for

6 about two years. They did a very thorough evaluation

7 of all of our assets, including over 200,000 asset.

8 They scheduled what the renewal needs are for each of

9 those assets on an annual basis.

10 Our asset management plan uses a concept of

11 risk for prioritizing the renewal of our different

12 assets, and risk is simply the probability of failure

13 of an asset multiplied by the consequence of failure.

14 For instance, a pipe, an old pipe has a high

15 probability of failure. Its location within the city

16 influences its consequence of failure, a pipe in front

17 of a hospital or through a business district has a

18 higher consequence of failure. It would be more

19 disruption if that pipe fails. So we try to target

20 those higher risk assets for renewal first.

21 This is the pie chart that categories our

22 different assets into four different categories,

23 including water, drinking water pipes. The

24 replacement cost of those would be about $1.9 billion.

25 Our wastewater or sewer pipes, they have a replacement

5cbb4603-a9e9-463d-a599-2589072391b5


1 cost of about $1.8 billion, and then our sewer plant

2 and our water plants, which includes The drinking

3 water plant, plus all the wells and whatnot, each have

4 a replacement cost of about $6 billion. So we have a

5 total -- if you were to go out and try and replace all

6 of our assets right now, it would cost over cost over

7 $5 million.

8 This i kind of a busy chart. It comes from

9 the GHD asset management plan. What it shows is

10 the -- their estimated or recommended asset renewal

11 spending by year for the next hundred years. And you

12 can see it's color coded, and those refer to the four

13 colors on that previous pie chart that looks at the

14 field water, field sewer, plant water, plant sewer.

15 But the overall chart, the thing that looks like a

16 mountain, a set of mountain peaks, is the overall --

17 it's the sum of those different components. And it's

18 just shows the amount of spending that they think we

19 need to do on an annual basis for the next hundred

20 years to keep our system in good working order.

21 They estimated an average renewal need of

22 $76 million over that hundred-year period; that's in

23 2010 dollars. And as Mr. Sanchez just mentioned,

24 we're currently spending about $41 million, so there's

25 a $35 million gap between what we should be spending

5cbb4603-a9e9-463d-a599-2589072391b5


1 what we actually are spending.

2 Quality behind an asset management results

3 in failures of our assets. For instance, sewer

4 collapses and waterline breaks. You can see here a

5 couple of examples where sinkholes have developed due

6 to a sanitary sewer pipeline failure. You see in the

7 one picture we actually see a City of Albuquerque

8 utility vehicle. It's been swallowed up by the

9 sinkhole.

10 This is from -- these are two photos from

11 last April, when we had an interceptor collapse along

12 Broadway, which backed up sewage in the interceptor

13 and it came out along Broadway and Pacific Avenue

14 here. This is actually raw sewage pouring onto the

15 city streets.

16 Here is a recent waterline break at a

17 charter school nearby, and it made the news pretty

18 dramatically. And the other photo is actually nearby

19 essentially at the corner of 5th and Marquette, right

20 outside the city hall. It was last December when he

21 had to actually shut down city hall for a day in order

22 to restore water service.

23 One of the issues is our level of service

24 that the Water Authority provides to its customers

25 will go down if we don't keep up with our asset

5cbb4603-a9e9-463d-a599-2589072391b5


1 management.

2 In addition to the hundred-year asset

3 management plan and GHD prepared for us, we are also

4 doing what we call tactical ten-year asset management

5 plans, which are much more focused on different

6 categories of our assets and only look at a ten-year

7 period, and look at it in much more detail, evaluating

8 the actual conditions that the -- of the different

9 assets. And we've so far completed a ten-year asset

10 management plan for our sewer interceptors and also

11 our small diameter water and wastewater pipelines.

12 And these asset management plans are actually being

13 used to target the higher risk assets for renewal in

14 fiscal year '12.

15 Currently underway is the sanitary sewer

16 lift and vacuum station asset management plan, and

17 then an asset management plan for water storage

18 reservoirs. And in the coming years, we'll start one

19 for our water booster pumping stations, our large

20 diameter water pipelines and our wells.

21 Also at last April's board meeting,

22 Mr. Stomp presented the decade plan. It was just

23 recently developed. This identifies our capital

24 improvement projects for a ten-year period. We

25 develop one every two years, and it incorporates data

5cbb4603-a9e9-463d-a599-2589072391b5


1 analysis from the asset management plans, both the GHD

2 plan and the two 10-year asset management plans we've

3 so far developed. And then it's directly linked to

4 the Water Authority's financial plan.

5 This chart just shows our spending, our

6 projected spending for the next ten years; again,

7 based on the decade plan that's been approved and it

8 shows a column for each fiscal year, starting with

9 fiscal year '12 all the way through fiscal year '21.

10 And it's color coded. The blue portions of the

11 columns at the bottom are the moneys targeted for

12 rehab the south side water reclamation plant. And

13 then the red portions of the bars are for the other

14 assets. And at the very top, you can see a little bit

15 of green, and that's the $1 million special funding

16 that's used for rehabbing steel waterlines.

17 You can see that in the initial several

18 years, we have a budget of about $41 million. It goes

19 up and down by year a bit, but then in 2017 we start

20 ramping up by $3 million a year. And eventually, by

21 2028, at this rate, we'll reach that $76 million

22 renewal spending requirement that GHD identified in

23 their asset management plan.

24 This chart just shows our current status as

25 of last month, March, of our committed renewal

5cbb4603-a9e9-463d-a599-2589072391b5


1 spending on our asset renewals. The top horizontal

2 line is $44.1 million. That's just our total renewal

3 budget plus the $1 million special funding. The green

4 horizontal line is the budget for fiscal year '12 for

5 the renewal of the south side water reclamation plant.

6 And then the blue horizontal line is for the other non

7 south side water reclamation plant we have.

8 You can see that we've so far committed

9 about $37 million renewal spending for this year. Our

10 commitments for spending on the south side reclamation

11 plant, as indicated by the green curve at the bottom,

12 we're a little bit behind schedule on that. We hope

13 to ramp up that spending for next fiscal year. But we

14 are compensating for that by spending a little bit

15 more this year on our non-south side water reclamation

16 plant spending.

17 Just some of the examples of what we're

18 spending our money on this year. For groundwater and

19 surface water production facilities, treatment,

20 pumping and storage, about four and a half million

21 dollars; drinking water pipelines, about $9 million;

22 sanitary sewers, five million; lift and vacuum

23 stations, about 1.1 million; odor control stations,

24 one and a half million; the south side reclamation

25 plant, 12 million; and the franchise fee compliance is

5cbb4603-a9e9-463d-a599-2589072391b5


1 about $3 million, and what that involves in anytime

2 the city or county is installing storm drains,

3 oftentimes our infrastructure is in the way and we

4 have to move it and we have to actually pay the city's

5 contractor to move our infrastructure.

6 Asset infrastructure renewal backlog.

7 During development of the 2012-2021 decade plan, staff

8 identified a backlog of over $355 million in unfunded

9 renewal projects. Essentially, these are projects

10 that we've identified but we don't have the budget to

11 do in the next decade. That included unfunded sewer

12 pipelines at 70 million, unfunded drinking water

13 pipelines at 141 million, unfunded drinking water

14 plant facilities, 119 million, unfunded lift and

15 vacuum and odor stations, seven million, and the

16 unfunded soil amendment facility assets, about six

17 million.

18 This is a chart that actually Frank Roth

19 helped me develop. It just shows our backlog based on

20 information that was developed by the GHD's asset

21 management plan. And, again, it shows -- it's similar

22 to what staff came up as a backlog. It actually show

23 our backlog is actually higher when you look at it

24 from an asset management standpoint. And the chart

25 just shows -- at the bottom there is our backlog, and

5cbb4603-a9e9-463d-a599-2589072391b5


1 you can see how it grows or gets lower as we progress,

2 and it reaches about $200 million at 2021. Again,

3 these are projects that we've identified that need to

4 be rehabbed, we just don't have the budget to do it.

5 And you can see in 2017, our actual budget,

6 the bars at the top of the chart actually start to

7 ramp up at $3 million a year. And at 2028, it reaches

8 that $76 million a year figure. But you can see even

9 over the 20-year period, we never get rid of the

10 backlog. We're always going to have a backlog

11 currently.

12 This is the same graphic, but shows what

13 would happen if we advanced the increase in our CIP

14 spending by two years, from 2017 to 2015. Again, that

15 would be -- in 2015, increase our CIP renewal budget

16 by $3 million and then advance it by $3 million every

17 year after that until we reach $76 million. And you

18 can see a dramatic drop in the of backlog. It never

19 gets much above $100 million. And then by 2027, the

20 backlog is basically taken care of.

21 With that, do you have any questions?



24 COUNCILLOR GARDUNO: Did you have a question,

25 Mr. Perry? Go ahead.

5cbb4603-a9e9-463d-a599-2589072391b5


1 MR. PERRY: Mr. Sanchez, this question might be

2 directed to you as well. It seems that the capital

3 program is in no bay capable of keeping up with the

4 needs as the current projections are for a

5 hundred-year need and reaching the $76 million per

6 year. But that changes in 2028, I understand.

7 MR. SANCHEZ: Mr. Chairman, Mr. Perry, I think

8 what Dave Price lis alluding to is to get to that

9 $76 million threshold, we need -- we cannot bridge

10 that financial gap in a short term. So our plan would

11 be over a decade to incrementally add $3 million to

12 our capital spending.

13 So right now we're assuming 2017, $3

14 million, 2018 would be $6 million, 2019, $9 million,

15 and it would keep compounding. If we can get to that

16 $76 million figure and maintain that going forward, we

17 not only could take care of the backlog but we stay

18 current with our rehab and replacement going forward.

19 MR. PERRY: And how does the revenue side of

20 picture keep up to be able accommodate that type of

21 commitment on the capital side?

22 MR. SANCHEZ: Mr. Chairman, Mr. Perry, I think

23 that's the end of the presentation. I can answer that

24 now, if you'd like.

25 MR. PERRY: No, I don't want to take

5cbb4603-a9e9-463d-a599-2589072391b5


1 Mr. Cassidy's thunder away. Thank you.

2 CHAIRMAN SANCHEZ: Councillor Garduno, then

3 we'll have Mr. Cassidy come up and give his

4 presentation.

5 COUNCILLOR GARDUNO: Thank you, Mr. Chair.

6 I had a simple questions, and I think it was

7 partially answered. But how -- are we going to have

8 to bond for this gap, if you will?

9 MR. PRICE: Mr. Chair, Board Member Garduno, I'm

10 really not the best person to answer that.

11 MR. SANCHEZ: Mr. Chairman and Councillor

12 Garduno mit would be a combination. The board policy

13 for our basic capital program is 50 percent is funded

14 with bonds and 50 percent is matched with cash. So

15 going forward, that would continue to be the case.

16 And it's a 12-year term for financing, except for

17 special projects like the San Juan Chama Water

18 Treatment Plant or the south side reclamation plant,

19 which are 20-year term projects -- 25 year, I'm sorry.

20 COUNCILLOR GARDUNO: But those are cumulative.

21 In other words, those bonds have to go out to be able

22 to garner that money?

23 MR. SANCHEZ: Correct. And Mr. Cassidy in this

24 next presentation will show you our total indebtedness

25 and the rate of repayment and what our debt structures

5cbb4603-a9e9-463d-a599-2589072391b5


1 will look like over time.

2 COUNCILLOR GARDUNO: And rate structures?

3 MR. SANCHEZ: Yes. Well, our debt structure.

4 CHAIRMAN SANCHEZ: Let's go ahead and proceed

5 and conclude the presentation, then we'll open it up

6 for questioning.

7 Mr. Cassidy.

8 MR. CASSIDY: Good evening, Mr. Chair, Members

9 of the Board. What I'm going to begin with is a

10 summary of the current outstanding debt of the Water

11 Authority. And just for the purpose of those viewing

12 and in the audience, the bonds and loans that the

13 Water Authority obtains are repaid from net revenues

14 generated from operation of the water and sewer

15 system, the Authority's system, not from property

16 taxes, not from gross receipts taxes. So we need to

17 set rates and charges sufficient to pay principal and

18 interest, pay operating expenses and pay for capital

19 replacements, as Mr. Sanchez just described.

20 You have board policies in place that

21 require a number of things to happen. We try to

22 target that 50 percent of your capital needs on basic

23 needs program, just replacement, normal expansions to

24 be paid with Authority cash generated from rates and

25 balance from bonds.

5cbb4603-a9e9-463d-a599-2589072391b5


1 The basic need program -- I'll actually go

2 to the slides here. We have 690.9 million of

3 outstanding bonds, with an average rate of a little

4 over 4 percent. It's fixed rate debt. There's no

5 variable rate debt, no interest rate swaps on any of

6 the debt. We do have senior lien debt and subordinate

7 lien debt, all of the debt or loans that we take out

8 from state or state agencies, we put it at subordinate

9 lien level so that debt that is outstanding in public

10 investors hands and rated by rating agencies enjoy a

11 senior lien.

12 We have a senior lead debt broken down to

13 669 million, 20.4 million a subordinate lien and 1.5

14 million a super subordinate lien debt. $173 million

15 of the $690 million of debt is for basic needs, those

16 normal things that you have to do every year to fix

17 and replace. That's the 12-year maturity debt. Final

18 maturity currently on all of that debt is 2023. The

19 average rate is about 3.74 percent. The average life

20 of that debt is just under five years, about four

21 years.

22 We have, however, $495 million of special

23 needs project debt, senior lien debt that's rated that

24 was originally issued with a 25-year final maturity.

25 The average life of this debt is a little under ten

5cbb4603-a9e9-463d-a599-2589072391b5


1 years. The average rate, 4.63 percent and the final

2 maturity 2037. I'm sorry for the detail.

3 We do have -- and I'll get to a graph that

4 will help you put this all in order in your minds.

5 But we do have the subordinate lien debt that's been

6 taken out for various purposes through the New Mexico

7 Environment Department or the New Mexico Finance

8 Authority drinking water loan program or the water

9 trust board for various special needs projects, like

10 the valley utilities project or the Santa Barbara

11 project or the Carnuel project. And the Carnuel

12 project, that loan of 1.5 million was accompanied by a

13 state match of 3.9 million.

14 Here's the picture that we need to get to.

15 And what we've done here is break down the basic needs

16 debt, the special needs debt by principal and

17 interest. And this probably doesn't work, but the

18 dark blue area is the principal that matures on your

19 basic needs debt. The light blue is the interest on

20 that debt over the times 2012 to 2024, and in the

21 special needs debt for San Juan Chama and also the

22 very costly projects that we've put in place as a

23 community, the dark brown is the principal payment,

24 the light drown is the interest on that debt, and

25 you'll notice over time, as principal pays down,

5cbb4603-a9e9-463d-a599-2589072391b5


1 interests decreases and principal increases.

2 We've also layered in here, if you can see

3 it, debt for future basic needs borrowings that we

4 anticipate every two years. As was described to you,

5 we try to finance about 30 or a little -- thereabouts

6 every year for basic needs. But we really borrow ever

7 two years about 60 to $62 million. Those are layered

8 in to show you that, over time, our debt service

9 requirements, principal and interest, will grow. And

10 what this is going to do, along with your operating

11 expenditures, is drive your rate structure and rate

12 increases. Hopefully, you know, that is obvious. And

13 if it's not, we'll be happy to slow down and go back.

14 So we do have publicly sold debt and we do

15 apply for ratings from Standard & Poor's and Moody's &

16 Fitch, I think as you all are very aware, last July

17 Fitch, which rated us at the A-plus level downgraded

18 the Water Authority primarily because of declining

19 debt service coverage numbers, that is when you

20 compare your net revenues available for debt service

21 to your actual principal and interest payments. We

22 fell below a covenant we made to bond holders; that is

23 that coverage would be 1.33 times debt service. We

24 fell below that, and also our liquidity really fell

25 substantially as well.

5cbb4603-a9e9-463d-a599-2589072391b5


1 The board, however, having put in place the

2 two rate increases that you have done, one was

3 effective July 1st, 2011 and the other July 1st, 2013,

4 has helped, and, you know, as we monitor the cash,

5 we're rebuilding liquidity again. But we did have

6 that rating downgrade, if you will, last July. But

7 Fitch still, you know, rates us in a double A

8 category, which is still a high quality rating. And

9 other utility groups across the country that have

10 similar righting would be the District of Columbia,

11 Houston, Fresno, Pima County, Arizona, and San Diego

12 on Fitch. Standard & Poor's, this last month, as I

13 think all of you are now aware, did also downgrade us

14 from a very stellar Triple A rating to a Double A plus

15 for the same reasons, declining debt service coverage

16 and weak liquidity, and also the fact that you haven't

17 timely put rate increases into place the way we may

18 wanted to have put them in place had we known what was

19 going to happen with the declining expansion of

20 housing markets and so forth. You know, a lot of our

21 revenues do come from UECs, and when housing

22 development stops, our revenues decline.

23 With that said, City of El Paso, San Antonio

24 and Los Angeles Department of Water and Power have a

25 Double A plus rating, same as our rating now, as does

5cbb4603-a9e9-463d-a599-2589072391b5


1 the U.S. government; they have Double A plus from

2 Standard & Poor's. Not that we want to compare

3 ourselves.

4 Moody's has rated us historically as Double

5 A-1. El Paso, Phoenix, Tucson, Denver and Dallas have

6 a similar rating from Moody's. We included on this

7 page the definitions of those ratings. And again,

8 we're in among the highest rating categories, even so.

9 Again, you know, for bragging rights, you always to be

10 Triple A. For borrowing purposes, you want to be

11 Triple A. Having a Double A plus, Double A-1 rating

12 will still allow you to access the public markets, but

13 that doesn't correct our need to rebuild liquidity and

14 meet our debt service covenant coverage, covenant

15 requirement that we made historically to bond holders

16 and we're measured against in the public market.

17 So we created this next graph to put this

18 hopefully in a little more perspective. There is a

19 solid yellow line across the top, and this is the

20 board's policy. We want our debt service coverage

21 target to be 1.5 times coverage. And, again, this is

22 net revenues, not counting noncash items, depreciation

23 measured against your annual debt service requirement,

24 1.5.

25 Our legal covenant, if you will, in all the

5cbb4603-a9e9-463d-a599-2589072391b5


1 bond resolutions, is the green line at 1.33, and you

2 can see the red line is the coverage that we actually

3 achieved, and you see we fell below the green line in

4 three years. In 2012, you know, we hope to be above

5 that. Your staff has said that we will indeed be

6 above that.

7 And then there's a dotted red line that

8 shows how we're going to get back to the 1.5 times

9 coverage. And this does include all the future

10 borrowings. If I could, there are a number of other

11 key ratios the rating agencies target and look at when

12 they're rating us, and investors look at when they buy

13 your bonds. One is the age of plant. And what we've

14 done here is compare, for the last six years, where

15 our age of plant, the calculation that determines how

16 old our system is, compares to Triple A, Double A and

17 A rated utilities across the country. And this is

18 where we outperform a lot of the other Double A and

19 Triple A rated credits. They have a 13-year average

20 life and ours is nine and ten years.

21 This reflects the fact that you've spent a

22 lot of moneys, especially San Juan Chama, rebuilding

23 the system. As this goes up, it's a bad number. The

24 senior debt service coverage number, the senior lien

25 debt service coverage is shown here, and most Double A

5cbb4603-a9e9-463d-a599-2589072391b5


1 and Triple A rated utilities are over two times

2 coverage, seeing two and a half times coverage. In

3 the last three years, we've been below what we've

4 historically done. Again, this is the reason we were

5 downgraded, because our coverage has fallen.

6 Projected water rate increases I think tells

7 the story of what got us here. We have been adopting

8 a rate strategy that results in an average rate

9 increase over time of about 2 percent; whereas, Triple

10 A rated and Double A rated utilities are 5 and

11 6 percent on average, historically.

12 The next chart, which is the ten-year bond

13 principal payout reflects how much of our debt is

14 repaid within ten years. And when we issue debt, we

15 amortize it every year and we want it to pay off as

16 rapidly as possible. And your 12-year rule on basic

17 needs really helps this. And you can see, I think

18 that number -- about 52 percent of our debt is paid

19 off within ten years, which is really admirable.

20 From a liquidity standpoint, there are a

21 couple things here that are of concern. The days cash

22 on hand calculation shows that in 2011, we fell to 77

23 days cash on hand when our Double A and Triple A rated

24 counter parties or comparables or peers were many

25 times above that. Our day's working capital also

5cbb4603-a9e9-463d-a599-2589072391b5


1 declined, reflecting the fact that we do need

2 additional revenues. Our operating margin, however --

3 and I'll highlight this for those of you who can't see

4 it on the screen here -- you know, we're about

5 35 percent, which is great. And what we're spending

6 that money on is capital and debt service. And our

7 reserves have diminished and need to be rebuilt.

8 With that said, I'll stop there and stand

9 for questions or turn it over to Mark.


11 MR. SANCHEZ: Mr. Chairman, if I could answer

12 Mr. Perry's question. Going forward, this is the

13 finance plan. Assuming we maintain our reserves at

14 one-twelfth going forward for the next decade,

15 assuming we start spending $3 million a year for our

16 asset management ramp-up program in 2015, and that we

17 maintain a $10 million annual spending for our south

18 side reclamation plant, assuming those three items, we

19 see the need for a rate adjustment in 2016 and 2018.

20 We have never managed for rating from

21 Standard & Poor's, Fitch or Moody's. The reason for

22 that is the rating agencies, as Mr. Cassidy showed,

23 they want you to have almost a year of cash on hand.

24 That would require staggering rate increases for our

25 customers just to satisfy a particular rating agency.

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1 They have always looked at us in terms of board

2 policies, in terms of our water supply and in terms of

3 delivering what we say we're going to do in the future

4 each year. Councillor Jones, Councillor Garduno --

5 I'm sorry, De La Cruz, were with us at this last

6 rating agency presentation and they could attest to

7 the some of the dialog and the feedback we got from

8 the rating agencies.

9 However, we've always tried to manage on the

10 margin, quite frankly, and only go to the ratepayers

11 when absolutely necessary. That has come to roost

12 basically in this last year and the rating agencies

13 have sent a signal saying: You're still highly rated,

14 but you need to shore up a few things going forward if

15 you don't want additional downward pressure on your

16 rating. And I think today, we're still very highly

17 rated. There's nothing to be ashamed of. But going

18 forward, we do see a need unfortunately for rate

19 adjustments into the future.

20 Now, if you ask what's the consequence of

21 not doing it, would it affect our day-to-day

22 operations? Not substantially. However, the deferred

23 maintenance of our capital projects, as Mr. Price

24 showed, would just continue to mount going forward.

25 So we would see more emergencies, more of our capital

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1 spending would be shifted to operating expense in

2 terms of emergency repairs with water and sewer line

3 repairs, and more distribution in the roadways and our

4 reserves would continue to decline.

5 At this point we'd be happy to answer any

6 questions. But quickly, let me just give you some

7 comparable, because as we're looking for additional

8 revenues, in your mind you have to be asking the

9 question: Are we bloated in bureaucracy? How do we

10 compare to other utilities?

11 As Frank Roth mentioned earlier, we

12 benchmark ourselves against other water and wastewater

13 utilities in the western United States, serving a

14 population of a half a million plus. When we do that,

15 our water operation maintenance costs are comparable

16 to peers, despite the fact that we're literally

17 operating two water systems. We have a groundwater

18 based system and a surface water based system.

19 On the wastewater side, we're less than our

20 peers, and when we look at our customer water accounts

21 per employee, we're higher than our peers, meaning we

22 manage more accounts than they do. So we're more

23 efficient. And the same holds true on the wastewater

24 side. When we look at our rate structure and how we

25 compare to metropolitan areas in New Mexico and in the

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1 region, you can see Santa Fe and Rio Rancho are

2 substantially more than we are today and they have

3 rate increases that they're proposing going forward.

4 Colorado Springs, substantially higher. We're

5 comparable to El Paso and slightly more than Denver

6 and a little bit higher than Phoenix, although Phoenix

7 is highly subsidized.

8 So this is a low water user. When you look

9 at a high water user, the picture is almost the same.

10 The difference is Colorado Springs jumps to the top

11 and Phoenix exceeds El Paso as well as Denver based on

12 their tiered rate structure.

13 At this point, all three of us would be

14 happy to answer any questions you might have. Again,

15 this is for introduction only. There is nothing

16 before you to approve. These rate increases in the

17 future, we do see a need for that if we are to get a

18 better handle on our capital program and maintain our

19 reserves going forward.


21 Commissioner De La Cruz.

22 COMMISSIONER DE LA CRUZ: Thank you, Mr.

23 Chairman.

24 Mark, what percentage of the total, if

25 that's the appropriate question, will apply itself to

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1 the south side reclamation plant?

2 MR. SANCHEZ: Of the total increase going

3 forward?

4 COMMISSIONER DE LA CRUZ: As projected.

5 MR. SANCHEZ: Well, if you assume $30 million

6 over the next decade going to additional basic rehab

7 spending, and approximately $200 million will go to

8 the south side reclamation facility, the lion's share

9 of it is. However, most of that will be bonded; that

10 will not be cash.

11 COMMISSIONER DE LA CRUZ: And that will be

12 within the next decade?

13 MR. SANCHEZ: Oh, yes. If we don't ramp up our

14 spending at the south side reclamation plant and do

15 the improvements that we have planned, we'll see EPA

16 sanctions because we will violate our discharge

17 permit.

18 COMMISSIONER DE LA CRUZ: Can you generally

19 describe the improvements that you're talking about.

20 MR. SANCHEZ: For those of you that have visited

21 the plant, it's literally everything incrementally

22 going forward. We return, on average, 55 million

23 gallons of water a day back to the river, so that's --

24 every time someone flushes the toilet, there's a

25 septage hauler that brings sewage that's pumped from a

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1 septic tank. We have to treat all of that and return

2 it to the river. And unfortunately, unlike the water

3 treatment plant that we can turn off, we cannot shut

4 off the sewer treatment plant. There is no way to

5 stop the gravity flow of sewer and returning that to

6 the river. So the consequence of that is permanent

7 exceedances in terms of contaminants to the river,

8 which it's not in our interest to do that, and not in

9 the downstream users' interest of us doing that.


11 Chairman.

12 CHAIRMAN SANCHEZ: Councillor Garduno.

13 COUNCILLOR GARDUNO: Thank you, Mr. Chair. So

14 from your presentation, and I see here the finance

15 plan, spending is proposed for 2012, 2014 '16 and 18,

16 is that correct, at 5 percent?


18 that's correct. However, the 2012 and the 2014 are

19 rate increases that have already been approved. 2016

20 and 2018 have not.

21 COUNCILLOR GARDUNO: Right. And you're thinking

22 that that will take care of the need, as it were, that

23 you just described?


25 we believe that's the case. And in going forward, the

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1 reason you don't see a rate adjustment after 2018 all

2 the way through 2021, if you go back to Mr. Cassidy's

3 graph of our debt service payment over time, as our

4 debt declines, it will provide additional revenue

5 going forward to fortunately help us push out

6 additional rate increases into the future.

7 So we think at this point we could probably

8 go at least four years after 2018 without the need for

9 an additional rate adjustment and spending the $76

10 million a year and taking care of the south side

11 reclamation plant and maintaining a one-twelfth fund

12 balance, which we need to do.

13 COUNCILLOR GARDUNO: And, Mr. Chair, if I could.

14 So going forward, you feel comfortable that

15 this will take care of it. However, is there any

16 contingency for, heaven forbid, some kind of a

17 catastrophic situation.

18 MR. SANCHEZ: Mr. Chair, Councillor Garduno,

19 yes. It's the rate reserve fund. If you recall, some

20 years ago this board -- and we had that conversation

21 about our conservation efforts, about climate change

22 that could effect our revenues, about the downturn in

23 the economy, so each budget cycle we put in $2 million

24 in a rate reserve fund which accumulates over time,

25 and that's kind of our rainy-day fund for these

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1 emergencies outside of the rate reserve, so outside of

2 our fund balance.

3 COUNCILLOR GARDUNO: Right. And I remember the

4 conversation, but it's not that many years back. So

5 two million a year doesn't accumulate that quickly.

6 Do we know where we're at at this point?

7 MR. SANCHEZ: Well, keep in mind, spent the rate

8 reserve fund to postpone our rate increase to 2012, so

9 today, we would probably have about $4 million after

10 this budget.

11 COUNCILLOR GARDUNO: But going to 202, we would

12 only have --

13 MR. SANCHEZ: Well, going forward, we don't

14 anticipate using that here, so, you know, if you had a

15 decade of rate reserve fund, that's $20 million. So

16 that's our contingency plan for a huge swing in some

17 emergency situation.

18 COUNCILLOR GARDUNO: And the hope is that we

19 don't have smaller swings yearly or bi-yearly.

20 MR. SANCHEZ: Correct. And we feel 99 percent

21 confident with the numbers we're presenting to you

22 today. These are not estimates. The assumptions

23 going are forward are that we can maintain or

24 expenditures at no more than 2 percent, even though

25 power, fuel and chemicals are rising exponentially.

5cbb4603-a9e9-463d-a599-2589072391b5


1 We still identify and budget efficiencies each year.

2 We are constantly looking in the organize, trying to

3 do things differently and better and cheaper, but as

4 effectively. And we're assuming our revenues, outside

5 of these rate adjustments, are about one and a half

6 percent.

7 COUNCILLOR GARDUNO: And, Mr. Chair.

8 Mr. Sanchez, what worries me is that --

9 these are, I'm sure, solid numbers and based on, you

10 know, not predictable but projections. But if these

11 disasters were to happen, you know, consecutively for

12 five years, where you're needing to spend five

13 million, there goes your 20 million that you had hoped

14 for in reserve that hadn't been accounted for.

15 And what I worry about is that we're getting

16 into the kind of debt that someday, 2020, we're going

17 to have to go to our ratepayers if we don't take care

18 of it now and say, "You know what? We're going to

19 have to ask for 20" -- a la PNM, we're going to have

20 to ask for a 25 percent increase.

21 MR. SANCHEZ: Mr. Chair, Councillor Garduno,

22 actually, it's the opposite. There are many ways to

23 push that debt out into the future. We do not

24 subscribe to that philosophy, we've never recommended

25 that to the board. There's many creative financing

5cbb4603-a9e9-463d-a599-2589072391b5


1 techniques that would allow us to not have rate

2 adjustments. But that would in fact push that debt --

3 that mount of debt would grow, it would not decline.

4 And as Mr. Cassidy showed you, our debt is declining,

5 even though we're highly leveraged. And the main

6 reason for that is the San Juan Chama project. We had

7 to borrow $500 million to bring that project online.

8 But the consequence of not bringing it online would

9 have foregone the equivalent of $5 billion in water

10 rights and it would not allow us to preserve thew

11 aquifer for future drought. I mean, I think we're

12 doing the right thing, but it comes at a cost.

13 COUNCILLOR GARDUNO: Mr. Chair, that brings me

14 to another concern that I have, which is the San Juan

15 Chama project, which is, again, sort of the

16 predictable with present day knowledge.

17 But with future knowledge, that may not be

18 an asset that we can go to if there is a back claim.

19 Is that true?


21 I'm not sure I'm following you.

22 COUNCILLOR GARDUNO: Well, if one of these days

23 the Colorado compact says, "You know what, New Mexico,

24 California, Nevada? You're not getting what you used

25 to get," just because that's the way it is, and it

5cbb4603-a9e9-463d-a599-2589072391b5


1 doesn't matter what piece of paper we present, it's

2 not going to, you know, stand because there's no

3 water.

4 MR. SANCHEZ: Well, Mr. Chair, Councillor

5 Garduno, I think that will occur at some point in the

6 future. There will be variability in supply. Not

7 because of the compact, just because of the Colorado

8 River. And that's part of the strategy, that we will

9 maximize surface water and minimize groundwater

10 pumping. When that occurs, we will have to pump more.

11 There's no question about that.

12 But to give you the context, the entire

13 Colorado River supplies seven states and about 15

14 million acre feet of water. We have rights to

15 48,200 acre feet. So that's a fraction of 1 percent

16 of that total. New Mexico gets about 11 percent

17 roughly of the upper Colorado as part of that compact.

18 So the compact in and of itself will not have

19 shortages. It's if there's a shortage of Colorado

20 River water due to climate change or variability, then

21 there will be equal sharing of shortages.

22 COUNCILLOR GARDUNO: And percentage of shortage

23 is still referencing the shortage.

24 MR. SANCHEZ: Certainly.

25 COUNCILLOR GARDUNO: It doesn't matter that we

5cbb4603-a9e9-463d-a599-2589072391b5


1 have 11 percent, but if we had 11 percent of a bucket

2 and now we have a cup, 11 percent is not that much.


4 on the flip side, we're very fortunate that we have

5 two supplies of water for this area that we can use

6 going forward. I think the prudent strategy that we

7 have undertaken is minimizing our pumping, allowing

8 the aquifer to recharge itself, which we've documented

9 by USGS. That is occurring at a pretty rapid clip and

10 because of what we're going.

11 COUNCILLOR GARDUNO: And, Mr. Chair, I promise

12 it's the last statement, question.

13 Which brings us back to earlier discussion

14 about what happens to the groundwater if it's

15 contaminated and we can no longer draw from it and

16 we're in the scenario that I just described?

17 MR. SANCHEZ: Mr. Chair, Councillor Garduno, I

18 assume you're talking about Kirtland Air Force Base.

19 Worst case scenario, this contamination proceeds,

20 contaminates one of the Ridgecrest wells. We either

21 shut that well off, we can treat it at the wellhead;

22 it's not uncommon, there's technology to the that; or

23 we can relocate the well. Those would be the

24 strategies. Now, that one well is not our water

25 supply. It is simply one well and one source of our

5cbb4603-a9e9-463d-a599-2589072391b5


1 groundwater portfolio. We move water daily from east

2 to west, north to south. Our system can accommodate

3 that. On average we consume 90 million gallons of

4 water a day. And regardless of variability of wells,

5 that consumption and that production occurs, and that

6 would occur in the future.

7 CHAIRMAN SANCHEZ: Thank you. I have one

8 question regarding the rate increases. We are looking

9 at one in 2013 and that is a 5 percent increase to the

10 ratepayers. And then again now we are looking at 2016

11 and 2018. What is going to be the average dollar

12 amount per ratepayer in those increases if we do go

13 through as a board and request those increases.

14 MR. SANCHEZ: Mr. Chairman, today the average

15 water and sewer bill is about $45, and that does not

16 include the solid waste component that we bill for

17 with the city. Each increment of 5 percent would be

18 rounding up about $3. So next year that $45 average

19 bill would be 48. If the board were to agree with our

20 projections and the needs, in 2016, it would be 51,

21 and in 2018, it would be $54.

22 CHAIRMAN SANCHEZ: And I have one question for

23 Mr. Cassidy, or Mr. Sanchez, maybe you can answer that

24 question. Looking at the 495.7 million for the San

25 Juan Chama project, we're looking at an average annual

5cbb4603-a9e9-463d-a599-2589072391b5


1 rate of 4.63 percent, are any of these bonds callable,

2 and can we get a better rate? Because I know it's a

3 long term bond.

4 MR. SANCHEZ: Mr. Cassidy is probably the better

5 person to answer that.

6 MR. CASSIDY: Mr. Chairman, there is debt that

7 is callable. I think there is one that's option

8 redeemable 2013. We've been monitoring that with your

9 staff. And you can expect, over the next four or five

10 months, we'll come with a recommendation to refinance

11 that. And as other debt becomes callable and it makes

12 sense to do it, we'll also recommend to the board.

13 But we actively monitor for you and happy to share it

14 you need it.

15 CHAIRMAN SANCHEZ: Okay. Thank you.

16 Any other questions?

17 COUNCILLOR GARDUNO: One very quick question.

18 And this is just edification.

19 Storm drain, is that Water Authority or is

20 that city or who does that go to?


22 that's City of Albuquerque. The storm system is the

23 City of Albuquerque's. We operate two pump stations

24 on behalf of the city, but the storm drain system, as

25 a whole, is owned and operated by the city.

5cbb4603-a9e9-463d-a599-2589072391b5


1 COUNCILLOR GARDUNO: And I know that if you do

2 that -- then are you charging back to the city the

3 cleaning up of that storm drain water, or how does

4 that work?


6 that storm drain water does not flow through the south

7 side reclamation facility. It goes directly into the

8 river.

9 COUNCILLOR GARDUNO: That was my concern. Are

10 we ever going to look at that?


12 CHAIRMAN SANCHEZ: Okay. Let's go ahead and

13 proceed to Item C, WUA R-12-11.

14 Mr. Sanchez, go ahead and proceed.

15 MR. SANCHEZ: Mr. Chairman, I believe we've

16 covered both of those items.

17 CHAIRMAN SANCHEZ: Okay. Next item is Item D,

18 WUA R-12-12, and we have Allan Porter that will make

19 that presentation.

20 MR. PORTER: Mr. Chairman, Members of the Board,

21 this is a presentation of the first reading of a

22 development agreement with the Eagle Vista, Limited

23 Liability Corporation, for water and sewer services

24 for the Eagle Ranch Road apartment complex development

25 Eagle Ranch -- Eagle Vista, LLC, recommend desires a

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1 200-unit apartment complex on the site just north of

2 the Eagle Ranch Road and Irving Boulevard intersection

3 this site is located outside the Water Authority's

4 service area. Eagle Vista has requested the water and

5 sewer service from the Water Authority. They have

6 gone through our availability process that is included

7 in the development agreement.

8 The water system to this site will consist

9 of a public extension of non-master planned water, and

10 it will be a private wastewater collection system that

11 discharges to our system in the Eagle Ranch vicinity.

12 The development agreement is required to allow the

13 proposed work to proceed. All costs of required

14 infrastructure will be borne by Eagle Ranch, LLC, and

15 there will be no reimbursement by the Water Authority

16 for the water and sewer infrastructure constructed.

17 All UECs and water supply charges will be imposed on

18 this development.

19 The proposed development agreement outlines

20 the terms and conditions to enable this project to

21 proceed and it is recommended by staff for board

22 approval. Do you have any questions?


24 This is to only for introduction, so it will not be

25 voted on this evening.

5cbb4603-a9e9-463d-a599-2589072391b5


1 COUNCILLOR GARDUNO: Is that correct?

2 CHAIRMAN SANCHEZ: That's correct. There's no

3 motion.

4 COUNCILLOR GARDUNO: Okay.

5 CHAIRMAN SANCHEZ: Okay. Let's go ahead and

6 proceed to approvals of the consent agenda. There are

7 no consent agenda items this evening.

8 Our next item on the agenda is approvals.

9 And that is WUA R-12-7, adopting the drought

10 management strategy as the Water Authority drought

11 management policy. I move approval.

12 COMMISSIONER DE LA CRUZ: Second.

13 CHAIRMAN SANCHEZ: We have a motion and a

14 second. And to make that presentation will be

15 Katherine Yuhas. Welcome.

16 MS. YUHAS: Thank you, Mr. Chair, Members of the

17 Board. The drought management strategy is being

18 updated tonight for several reasons. And the first is

19 that the original drought management strategy was

20 written when the Utility was a part of the city. And

21 so many of the water use reduction methods that were

22 proposed at that time are not things that the

23 Authority has the ability to enact. Another reason is

24 that the drought management strategy called for an

25 update every five years, so it's timely for us to do

5cbb4603-a9e9-463d-a599-2589072391b5


1 it now. We want it to conform with the 2007 water

2 resources management strategy. And, finally, we had

3 droughts in 2006 and 2011 when we used the drought

4 management strategy and we learned things from that,

5 so it's seemed appropriate to move forward with the

6 new strategy.

7 We worked with the customer advisory

8 committee on development of the new drought management

9 strategy starting last fall, and we met with them for

10 a brainstorming session before we ever even wrote

11 anything, and they helped us come up with both the

12 criteria and the water use reduction methods. And

13 then we worked with them again when a draft had been

14 put together and they were very helpful in developing

15 the chart that we've used for the criteria, which you

16 have in your packet.

17 What I would like to say about the two

18 criteria is that by developing two criteria, we have

19 the ability to get our customers involved in being

20 part of the solution of drought management. In the

21 drought management strategy everything that we do to

22 reduce water use during a drought is about getting our

23 customers to use less water, and so it makes sense to

24 have one of the criteria be how well are our customers

25 doing at reducing their usage, are they responding to

5cbb4603-a9e9-463d-a599-2589072391b5


1 the message that we're putting out there.

2 The other criteria is to maintain that same

3 environmental criteria that we had previously, which

4 is the criteria of groundwater pumping. And that

5 actually is a more stringent groundwater pumping

6 standard than was in the original drought management

7 strategy. And when you couple those two together on

8 your chart, you can see that, you know, you find where

9 you are in terms of groundwater pumping, you find

10 where you are in terms of GPCD and then you follow

11 that along to figure out what stage we're going to be

12 in.

13 For instance, last year, using the current

14 -- this proposed drought management strategy, we would

15 have been in Stage 1 drought. That is not what we did

16 last year. Last year we never got to Stage 1. Last

17 year we were just in a drought advisory. So this

18 strategy would be a little more stringent than what we

19 did last year.

20 And with that, I'll stand for any questions.


22 Commissioner Hart Stebbins.

23 COMMISSIONER HART STEBBINS: Thank you, Mr.

24 Chairman.

25 Ms. Yuhas, I notice that using the criteria

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1 on percentage of groundwater pumping goal, that under

2 these new criteria, we wouldn't reach Stage 1, in some

3 cases, until we're more than 140 percent. That

4 doesn't seem as if it puts a lot of emphasis on our

5 groundwater pumping goal. And we talk on this board

6 about the aquifer as our savings account, as water for

7 future generations. Why wasn't there more emphasis

8 put on the rate at which we're pumping out of the

9 aquifer?

10 MS. YUHAS: Mr. Chair, Commissioner Hart

11 Stebbins, this actually puts more emphasis on the rate

12 at which we are pumping water out of the aquifer. We

13 worked with CH2M Hill on developing this criteria, and

14 by using a percentage rather than a flat amount, which

15 is what the old strategy did, this actually links it

16 more tightly.

17 So for instance, if the goal was to pump

18 20,000 acre feet out of the aquifer in a given year,

19 we would have enter drought stages when we got to

20 24,000 acre feet, which is, you know, only 4,000 acre

21 feet more. That's really not that much, given that

22 the old strategy looked at 10,000 acre feet before you

23 went into an additional strategy.

24 COMMISSIONER HART STEBBINS: Thank you. And I

25 appreciate that this is a great improvement over what

5cbb4603-a9e9-463d-a599-2589072391b5


1 we have in place now. I think just in terms of moving

2 forward, it seems that you're putting a greater

3 emphasis on the gallons per capita per day than the

4 percentage -- than the pumping goal, how much we're

5 over the pumping goal.

6 Again, it seems that if we're not going to

7 Stage 1 until we're already at 140 percent in some

8 case, that we're not really making as big an effort to

9 protect the aquifer.

10 MS. YUHAS: Mr. Chair, Commissioner Hart

11 Stebbins, I think that this puts them in equal, you

12 know, importance in terms of the response we're

13 getting from our customers. And the reason we

14 included GPCD is because if our customers are doing a

15 great job in terms of reducing their water use and

16 responding to drought, which is what we did see in

17 2006 and 2011, we see that our customers do a00 good

18 job with a conservation message that we get out to

19 them, then we don't to be penalizing them with

20 additional very difficult measures. Some of these

21 things are going to be very hard on our customers if

22 we implement them, and so we want to make sure that

23 we're having a balance.

24 COMMISSIONER HART STEBBINS: So what are the

25 steps? So we go to Stage 1. What does the entail?

5cbb4603-a9e9-463d-a599-2589072391b5


1 Do you have that?

2 MS. YUHAS: I do.

3 COMMISSIONER HART STEBBINS: Like Stage 1, Stage

4 2, Stage 3.

5 MS. YUHAS: If you just wait one second. I'm

6 sorry that I don't have that up here.

7 The very first stage is a drought advisory,

8 and if you look on your chart, that's the areas that

9 green. In a drought advisory, we would enter into --

10 no matter what water usage patterns are, a drought

11 advisory is what we did last year, and all that is is

12 raising awareness with our customers. It's switching

13 all of our messaging to look out, it's a drought,

14 reduce the usage, getting that up on the billboards

15 and on TV.

16 We would do that without approval from the

17 board whenever the majority of Bernalillo County is

18 Stage 3 drought. And the reason that stage doesn't

19 require board approval is that we're anxious to get

20 that message out as soon as possible. We don't want

21 to have to wait for a board meeting, we want to get it

22 done.

23 All of the next stages, the drought warning,

24 the drought watch and the drought emergency are all

25 board approved, of course. And the first one, we

5cbb4603-a9e9-463d-a599-2589072391b5


1 would be enacting a doubling of water waste fees and

2 we would be offering a Drought Smart class rebate.

3 That would be a $20 credit on customers's water bills

4 for attending a Drought Smart class. And we are

5 unique among I think all the cities in the nation in

6 having positive measures in place in our drought

7 management strategy for our customers, to give them

8 assistance in doing the right thing during drought.

9 So that's the one that would take place during a

10 drought warning.

11 As we move to the next drought stage, we

12 would add more measures that are mandatory to this

13 list. The first of those would be doubling the

14 surcharges. Now, the surcharges are what a customer

15 gets on their water bill when they're using more than

16 their winter average. And so those are going to go up

17 and that's going to be pretty hard on our customers.

18 We would also change the time-of-day watering

19 restrictions. Right now, they're 11:00 to 7:00. That

20 would change from 9:00 a.m. to 9:00 p.m., no watering

21 during those time periods.

22 We would also stop offering variances to the

23 time-of-day watering restriction. The time-of-day

24 watering restrictions can have a variance if you are

25 installing sod or reseeding. Of course during a

5cbb4603-a9e9-463d-a599-2589072391b5


1 drought, it's not appropriate top sod or reseed, so we

2 wouldn't offer a variance except for athletic fields,

3 and that would be for the public schools and for the

4 parks department, and we've talked with them about

5 that variance. We have someone from the public

6 schools on our customer advisory committee.

7 And finally, we would be distributing

8 low-flow showerheads to our customers and advocating

9 five-minute showers. And that's the positive

10 incentive for them at that level.

11 Finally, when we get to a drought emergency,

12 we would be tripling surcharges. Yeah, I hope we

13 don't get to a drought emergency. I hope we don't

14 have to do that. And we would be reducing the

15 mandatory day-of-the-week watering restrictions by one

16 day per week. So for instance, if we're in July,

17 normally you could water three days per week in July,

18 we would only allow you two days per week.

19 And finally, the positive incentive in a

20 drought emergency is we would have a 20 percent

21 reduction rebate. And that would be structured for

22 our customers so they could sign up to voluntarily

23 reduce their usage by 20 percent and get some amount

24 of rebate. The exact structure of that rebate program

25 would depend on when it was enacted, you know, what

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1 time of year and how we would base that in terms of,

2 you know, how much they needed to reduce and compared

3 to what period and the amount of the money we'd give

4 them.

5 CHAIRMAN SANCHEZ: Commissioner De La Cruz.


7 Chairman.

8 Ms. Yuhas, this is a program that clearly

9 affects the public. How was the public allowed to be

10 involved and helped develop this, or at least to

11 review it?

12 MS. YUHAS: Mr. Chair, Commissioner De La Cruz,

13 we put out a public notice before the last board

14 meeting, in March, to let our customers know. This

15 has been on our website for months now. It was

16 advertised as part of the customer advisory committee

17 meetings and we did have members of the public attend

18 those meetings when the board was hearing -- when the

19 committee, I should say, was hearing those, and

20 members of the public participated in those

21 discussions.

22 COMMISSIONER DE LA CRUZ: And so with the ideas

23 that you received, were any implemented?

24 MS. YUHAS: Mr. Chair, Commissioner De La Cruz,

25 most of what you see here is a result of input from

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1 the customer advisory committee at their meetings.

2 Much of this was developed by them. That whole chart

3 that you see of the drought stage criteria, that was

4 put together at a meeting. I didn't even draw it. It

5 was a member of the committee who did it. So, really,

6 this has been a very collaborative process for us.


8 Chairman.




12 Ms. Yuhas, I want to compliment the entire

13 community in the service area for doing a lot of what

14 you have asked folks to do, and I think it's done

15 things. But it's one of those things where it's kind

16 of double-edged sword, I guess. The more we conserve,

17 the less money we bring in, the less money we have to

18 pay the debt we've just been talking about.

19 So, I mean, I certainly would not, you know,

20 encourage folks to not conserve because we need money,

21 but how are we going to, you know, come to that nexus

22 of those two things?

23 MS. YUHAS: Mr. Chairman, Councillor Garduno,

24 you have asked a really big question of me with that

25 one. Certainly, there needs to be a balance in terms

5cbb4603-a9e9-463d-a599-2589072391b5


1 of water usage. And one of the things we looked at

2 with the drought management strategy is that during

3 drought, we are trying to manage not just the river or

4 not just the aquifer but the aquifer, the river and

5 our entire community and the needs of the people here.

6 We have enormous infrastructure that people have put

7 money into. We have parks, we have landscaping, we

8 have people who want to turn on their swamp coolers so

9 they're not too hot. And we need to be able to

10 provide at some level for all of that. And this tries

11 top take that into account in addition to maintaining

12 the environmental issues also.

13 COUNCILLOR GARDUNO: Thank you. What about

14 shorter showers, but more expensive? That's something

15 that sort of the bothers me, because I don't know --

16 you know, I certainly want to encourage all of us to

17 conserve, but maybe the -- instead of 5 percent, it

18 will have to go to higher percentage.

19 I don't know, Mr. Sanchez, if you want to

20 even entertain that thought. Thank you.

21 CHAIRMAN SANCHEZ: Let's go ahead and proceed.

22 I mean, that will be a policy decision if there's a

23 rate increase.

24 We have a motion and second on the floor to

25 adopt WUA R-12-7. All those in favor, signify by

5cbb4603-a9e9-463d-a599-2589072391b5


1 saying yes.

2 ALL MEMBERS: Yes.

3 CHAIRMAN SANCHEZ: Opposed, no.

4 That carries unanimously.

5 (7-0 vote. Agenda Item 9 approved.)

6 CHAIRMAN SANCHEZ: Thank you, Ms. Yuhas.

7 Next item is other business. The first item

8 is the Kirtland Air Force Base jet fuel spill

9 remediation status report, and to give that report

10 will be Colonel Connelly.

11 Welcome, sir. Go ahead and proceed.

12 COLONEL CONNELLY: Mr. Chair, Members of the

13 Board, thank you for having us tonight.

14 Unfortunately, I am here to talk about fuel on the

15 aquifer which originated from Kirtland Air Force Base.

16 But I'm also here to tell you that the Air Force is

17 taking full responsibility for this. And I'm also

18 here to tell you that we're getting after it and

19 taking measures to get it cleaned up.

20 So on my first chart -- and what really

21 brings me here, I think what you requested me to come

22 here for is to brief you the results of our fourth

23 quarter round of sampling in our groundwater and our

24 soil vapor concentration wells. But I'm going to

25 focus on the results of the groundwater monitoring

5cbb4603-a9e9-463d-a599-2589072391b5


1 right now.

2 And the first chart you see is a map of the

3 EDB plume, ethylene dibromide, which is the

4 constituent that goes into solution and stays in

5 solution and travels away from the origin of the fuel

6 spill seemingly the longest. On this is chart you can

7 see the horizontal line on the map going horizontally

8 across the middle of the map. That Gibson Boulevard,

9 just to orient you. And then to the south of that is

10 the neighborhood Siesta Hills. Then it continues

11 south across Bullhead Park. And then you can see the

12 darker line there, boundary of Kirtland Air Force

13 Base. And as you can see, the plume then extends

14 about three blocks north of Gibson Boulevard. So I

15 just wanted to orient you to what you were looking at

16 on the map. And you are seeing the extend of EDB that

17 is registering above the maximum contaminant limit of

18 .05 micrograms per liter, or parts per billion.

19 The lighter blue dots are locations of our

20 groundwater monitoring wells. And then the dots that

21 are black with the yellow ring inside them represent

22 monitoring wells where we've actually seen raw fuel,

23 fuel in its liquid form, floating on the surface of

24 the aquifer in the fourth quarter, in the shallow

25 wells. So that's what this chart is.

5cbb4603-a9e9-463d-a599-2589072391b5


1 CHAIRMAN SANCHEZ: Let's go ahead and proceed.

2 Councillor Garduno, did you have a question?

3 COUNCILLOR GARDUNO: I have a question, because

4 I don't know if I'm oriented or if I heard you wrong.

5 But did you say the diagonal line is Gibson?

6 COLONEL CONNELLY: The horizontal line, sir, is

7 Gibson.

8 COUNCILLOR GARDUNO: At the very bottom. Okay.

9 Thank you.

10 COLONEL CONNELLY: The horizontal line going

11 across the middle of the chart, straight across the

12 mid way of the chart is Gibson.

13 One more time on this, on this chart. In

14 each of these light blue dots, in most of those light

15 blue dots, you're seeing a location where there are

16 actually three wells, a shallow well, which is at the

17 surface of the water table, an intermediate well,

18 which is about 15 feet deeper than the shallow well,

19 and then a deep well, which is about 50 feet into the

20 aquifer itself. So there are three wells at most of

21 those locations. You're seeing the results of the

22 shallow here.

23 The next slide is the results of the

24 intermediate wells. Those, about 15 feet below the

25 surface of the aquifer. We're showing you also the

5cbb4603-a9e9-463d-a599-2589072391b5


1 EDB concentrations we're seeing in the intermediate

2 level there. The outermost line just outside the

3 shading area represents the maximum contaminant limit

4 observed for EDB in the intermediate level.

5 And then continuing on to the deep wells,

6 there are only two deep wells, and those are the light

7 blue dots you see, one on either side of Gibson Avenue

8 that had any EDB at all detected.

9 So with EDBs not the only thing down there,

10 of course, we have raw fuel and the constituents of

11 the raw fuel. What this map shows you, and it doesn't

12 show you very well because we've got everything

13 overlaying on it all at once, but we have, of course,

14 all the BTEX compounds, benzene, ethylene, tolulene,

15 xylene. And those are all referenced there, but the

16 key to those compounds is that it appears to us that

17 micro degradation, bio degradation is occurring, and

18 so we're not seeing those constituents travel as far

19 from the original fuel site as EDB. So we think

20 biodegradation is acting to be keep those constituents

21 contained.

22 We also put total petroleum hydrocarbons in

23 the gasoline range organics and the diesel range

24 organics on there, the GRO and DRO. Those are not

25 regulated. Those have no standards. But we like to

5cbb4603-a9e9-463d-a599-2589072391b5


1 test for them because they're indicators that -- if

2 you find a TPH, DRO or GRO, it tells you you better be

3 testing in this location for your constituents of

4 concern, your benzene, your tolulene, your xylene.

5 And by the way, we did test at all of those locations

6 for those constituents of concern and they are

7 reporting as you see here.

8 In every lotion where we found the TPH DRO

9 and GRO, we did not find BTEX in every one of those

10 locations. So it's just and indicator for us. And we

11 don't find it everywhere we find those items.

12 I want to call your attention to the big,

13 huge green blob to the northwest of the fuel area. We

14 suspected that was a data anomaly in our fourth

15 quarter sampling. Took a peek at the first quater

16 sampling and we were right, it does not show up in our

17 first quarter sampling. So you can essentially

18 disregard that big ugly green blob there.

19 So this chart sort of ties everything we're

20 doing together. We have the characterization

21 activities that we've undertaken with the 78

22 groundwater wells, additional soil vapor wells. We're

23 doing direct push technique sampling along our former

24 fuel offloading rack. So all along the lines that

25 were leaking, we've taken soil samples. And we've

5cbb4603-a9e9-463d-a599-2589072391b5


1 also done some new log well testing. It's a

2 proprietary method of characterizing subsurface soil

3 vapor in greater measure than just regular soil vapor

4 monitoring.

5 Of course you also know we're doing

6 additional groundwater wells for EDB testing. And

7 this all goes into the evaluation phase. All this

8 stuff is feeding back to us. All the while we're

9 evaluating these characterization efforts, and along

10 the bottom, while we're doing this characterization,

11 we're still doing some initial treatment. And we have

12 been doing some initial treatment for years. It isn't

13 as robust as I know laypersons would want us to do,

14 and for me, I can't wait to get after this stuff.

15 I've been here since July of 2010 and I'm amazed at

16 the progress I've seen since I've been here. I'm

17 excited about the technologies we're getting ready to

18 put in place and to start sucking some of this fuel

19 out of the ground.

20 And it's all aiming at the final remedy.

21 Our goal here is to come up with a final design to --

22 the final long term design to get this stuff out of

23 the groundwater and prevent drinking water well

24 contamination, which so far we've done.

25 Looking at the path forward, we are getting

5cbb4603-a9e9-463d-a599-2589072391b5


1 ready to install three -- additional monitoring wells

2 at three locations in the sort of northeastern portion

3 of the plume area. Because you can see our fourth

4 quarter reveals that there's a data gap, because this

5 thing is going to the northeast and then all of a

6 sudden, it stops. We've got to know what else is

7 going on up there. So to do that, we asked the New

8 Mexico Environment Department to install three

9 additional wells at those locations. You can see two

10 on either side of Louisiana and one near or our

11 Kirtland Air Force Base Well Number 3.

12 The New Mexico Environment Department agreed

13 that that was a good idea, and they said, in fact,

14 "Why don't you drill three wells at each location,

15 shallow, intermediate and deep." We completely agree

16 with that because it will us reveal the presence of a

17 phenomenon known as a plunging plume. But I don't

18 care about the reason. It's prudent and we're going

19 to do it.

20 And we're going to allow the data from those

21 wells to help us figure out what we do next, more

22 wells, let us figure out where we're going to put

23 those wells. So we're going to continue our

24 characterization efforts. We're also going to

25 continue our remediation efforts and we're going to

5cbb4603-a9e9-463d-a599-2589072391b5


1 continue working with the New Mexico Environment

2 Department on an iterative approach to get this thing

3 characterized. All the while, we're pressing ahead

4 with our remediation efforts.

5 In fact, we just recently installed -- okay.

6 So I just talked about the installation of the

7 additional monitoring wells. We're going to start

8 that drilling by mid June. We are just drilled two

9 soil vapor extraction wells right in sort of the sweet

10 spot of the fuel plume on Kirtland Air Force Base. We

11 hit the area of highest soil vapor concentration,

12 which also corresponds to the highest levels of raw

13 fuel on the water table that we've seen. And we're

14 going to start running those soil vapor extraction

15 units on Monday.

16 We're also working toward a very robust soil

17 vapor extraction unit, so we're going to put those

18 engines that we've had running for quite some years

19 back on on Monday. By the fall, and we're hoping to

20 do it earlier, we're going to have a newly designed,

21 more robust soil vapor extraction system pulling a

22 greater amount of fuel out of the ground right there

23 at that location.

24 And then finally, we're going to start our

25 soil excavations here pretty quick that our sampling

5cbb4603-a9e9-463d-a599-2589072391b5


1 revealed where we need to dig up the soil and treat

2 it, along our old fuel offloading rack.

3 So with that, Mr. Chair, I will entertain

4 questions.



7 COMMISSIONER HART STEBBINS: Thank you, Mr.

8 Chairman.

9 And thank you for being tonight to share

10 this information with us. I was recently looking at

11 the contract that Kirtland has with Shaw

12 Environmental. And I understand that's a performance

13 based contract.

14 COLONEL CONNELLY: Mr. Chair, Commissioner Hart

15 Stebbins, yes, it is.

16 COMMISSIONER HART STEBBINS: Okay. And at least

17 the draft that I saw, the one that was online,

18 contained a number of benchmarks, and some at a year.

19 And I guess I'm not really clear what the date was for

20 notice to proceed. Can you tell me that?


22 Stebbins, it was 30 September of 2010.

23 COMMISSIONER HART STEBBINS: So one of the

24 benchmarks, one of the performance measurements was at

25 one year there would be a complete installation of

5cbb4603-a9e9-463d-a599-2589072391b5


1 interim measures to contain the NAPL footprint so it

2 doesn't expand or move. So that would have been due

3 by September of 2011. Do you feel that Shaw has met

4 that goal.


6 Stebbins, the Air Force submitted a work plan in

7 November of 2010 to do just that, to the New Mexico

8 Environment Department. In response to some of their

9 comments, we modified that plan in July of 2011, and

10 have actually yet to receive approval to do that. But

11 it is KK there's reason for it. There are technical

12 reasons for it, which we've actually only recently

13 come to fully understand. And we need to allow our

14 soil vapor extraction results to sort of tell us

15 whether that's the next prudent approach or not.

16 Because it is thought that this very robust SVE unit

17 we're going to install hopefully before the fall will

18 start changing the dynamics of this fuel plume

19 immediately and dramatically, potentially negating the

20 need for that, which would alleviate that contractor

21 of that requirement by direction of the regulating

22 agency.

23 COMMISSIONER HART STEBBINS: Okay. Thank you.

24 So if you were to describe the containment plan as it

25 exists, you've got a new well that's been drilled,

5cbb4603-a9e9-463d-a599-2589072391b5


1 you're saying it's going to go online Monday, is that

2 the extent of the existing -- what you would refer to

3 as an initial treatment plan? Is that sort of what's

4 in place now for the NAPL?

5 COLONEL CONNELLY: Commissioner Hart Stebbins,

6 yes. That would -- that would -- when they start

7 operating on Monday, they would be the extent right

8 now of that. It isn't the extent of everything we've

9 ever done.

10 COMMISSIONER HART STEBBINS: I understand. And

11 then you've got the more robust, the more powerful SVE

12 unit that would be coming in in the fall sometime.

13 And would that be implemented in the fall? Is that

14 the plan? Is it that would actually begin drawling

15 out the fuel sometime in the fall of 2012?

16 COLONEL CONNELLY: Yes, ma'am, absolutely.

17 COMMISSIONER HART STEBBINS: Okay. Great. And

18 then I wanted to just switch to the dissolve phase

19 question. And I know that's the one that has sort of

20 recently been in the -- been given a lot of attention.

21 What is the plan? So I know that right now you're in

22 the phase where you're still characterizing that.

23 You've had a discussion, you're going to install some

24 new monitoring wells. Is there any talk about the

25 containment plan? I mean, right now it looks from

5cbb4603-a9e9-463d-a599-2589072391b5


1 your data that it's within about 3300 feet of our

2 closest well, and not really clear actually the

3 extent, right? So right now you know that it has gone

4 at least that far, but do you have a well that has

5 come up clean yet, where you can actually say we know

6 it has not reached this point?


8 Stebbins, we thought we did. In the north, along --

9 you'll see just to the very north of that plume,

10 there's a well at Florida and Anderson. That's clean

11 right now for EDB. But that doesn't help us because

12 it doesn't look like that's the direction of travel.

13 So the answer is no, ma'am, we need to get some in the

14 ground to help be our sentries. We need to know in

15 those locations identified where -- whether there's

16 EDB present or not.

17 Now, there are different theories on what

18 this EDB is doing. It clearly is going into solution

19 and migrating away from the site. We don't know at

20 what rate it's doing that. If it does, it should be

21 traveling at the speed of travel of the regional

22 groundwater movement. We don't know if it -- once it

23 gets out there, does it somehow become static? We

24 don't know those things and we need to find that out.

25 COMMISSIONER HART STEBBINS: Great. Thank you.

5cbb4603-a9e9-463d-a599-2589072391b5


1 And, Mr. Chairman, just one more question.

2 Has there been discussion of an interim

3 containment plan for the dissolve phase, so EDB

4 specifically?


6 Stebbins, yes. That's LNAPL containment system you've

7 heard. And essentially the theory is that you place

8 this extraction well at the toe, of the historic

9 northern toe of that observed liquid NAPL product, and

10 you get those water flow nets coming into that well

11 thereby catching anything that's going into solution

12 from that liquid phase fuel and up the well.

13 But there are lots of catches with that.

14 What do you do with the water? What does that do to

15 the liquid fuel sitting behind it? Does it make it

16 start moving? There's some evidence that it could do

17 that. So that's why we're going to work with NMED

18 before we implement that. We're going to look at the

19 results of the soil vapor extraction and see what it

20 does to this thing, and then we'll let the data advise

21 us on when and if we start -- we implement that

22 containment system.

23 COMMISSIONER HART STEBBINS: Okay. Thank you.

24 Bus as far as the product, the fuel constituents that

25 have already dissolved into the groundwater, are there

5cbb4603-a9e9-463d-a599-2589072391b5


1 strategies for that kind of remediation or an interim

2 plan for addressing that, or is it really going to be

3 at this point keeping more from getting into the

4 groundwater?

5 COLONEL CONNELLY: You mean removing it?

6 COMMISSIONER HART STEBBINS: Right. Or what

7 you've described, if you can stop the spread of the

8 plume it's going to hopefully slow the spread of the

9 EDB.


11 Stebbins, it's -- there's no plan to actually go in

12 and remove the dissolve constituents. The plan is run

13 these SVEs and slow the rate at which the dissolve

14 contaminants dissolve and go into solution.

15 COMMISSIONER HART STEBBINS: Thank you very

16 much.

17 COLONEL CONNELLY: Thank you, ma'am.

18 CHAIRMAN SANCHEZ: Councillor Garduno.


20 Thank you -- for some reason I can't

21 remember if it's colonel.

22 COLONEL CONNELLY: Yes, sir.

23 COUNCILLOR GARDUNO: Colonel Connelly, thank you

24 for being here. Looking at not -- I think it's your

25 last -- it's your last slide, there's kind of a time

5cbb4603-a9e9-463d-a599-2589072391b5


1 -- well, not a timeline, but an explanation of when

2 things might happen. What bothers me is that the SVE

3 unit installation says fall 2012, but it's design in

4 progress. Does that mean that it's going to be

5 finished by then or it's going to take till then to

6 design it, or it may take longer than that?

7 COLONEL CONNELLY: Mr. Chair, Councillor

8 Garduno, that is our -- that is our target, to have it

9 in place and running.

10 COUNCILLOR GARDUNO: So if it's not ready by

11 then, again, we won't be extracting anything until

12 that happens?

13 COLONEL CONNELLY: We will actually. We have --

14 beginning Monday, this coming Monday, the 23rd, we are

15 going to put those soil vapor extraction unit --

16 internal combustion engine unites on our two soil

17 vapor extraction wells we've dug.

18 The difference between the running of the

19 soil vapor extraction units in the past to now is that

20 those soil vapor extraction units have been sitting on

21 top of just monitoring wells trying to pull fumes out

22 of the ground. Monitoring wells were not meant for

23 that; they were never built and designed to do that.

24 So it wasn't very efficient. We weren't really doing

25 as good a job as we could. So we dug these two new

5cbb4603-a9e9-463d-a599-2589072391b5


1 ones, like I said, in the sweet spot and we designed

2 them specifically for this eventual large scale soil

3 vapor extraction system. So now, by putting these

4 internal combustion engine unites back on those two

5 new wells, until we get the big robust one in place,

6 we're still going to be pulling product. And our

7 estimate we should be able to pull about 200 gallons a

8 day per well with those internal combustion engine

9 units. So starting Monday, we're expecting 400-ish

10 gallons a day coming out of the ground.

11 COUNCILLOR GARDUNO: I don't know how quick my

12 math is, but that's about 60 or 70 years at that rate.

13 COLONEL CONNELLY: Again, sir, it's an interim

14 measure. We're going to put this big one on. We're

15 hoping to bump that up to about 1,000 gallons a day

16 and then have a look at what the fuel plume is doing,

17 how that effects the fuel plume. And then, again,

18 this is another -- the key to this is that this

19 especially is an iterative approach. This could be

20 part of the final remedy, we don't know yet. But one

21 thing is for sure, it's an interim measure to start

22 pulling things out of the ground.

23 But if it proves to be really successful,

24 we'll start looking at other areas around it that have

25 also high concentrations of soil vapor and maybe punch

5cbb4603-a9e9-463d-a599-2589072391b5


1 some new wells. But we've just got to let the data

2 tell us what's going on there. And we'll work with

3 NMED and we'll start doing that. So this is -- I

4 don't think this is anywhere near close to the final

5 remedy, sir.


7 Colonel Connelly, fall 2012 is what we just

8 talked about. But then if you come down to the next

9 column, horizontal column, it says summer 2012 is soil

10 excavation. So you're going to start soil excavation

11 this summer.

12 COLONEL CONNELLY: Mr. Chair, Councilman

13 Garduno, yes, we are. We've already done some soil

14 excavation in the immediate vicinity of the fuel

15 offloading rack, but now we've sampled along those old

16 lines and found out where we had leaking lines and we

17 have high concentrations of soil vapor by using those

18 push soil testing methodologies, and where we had

19 those hits, we're going to dig it up and we're going

20 to do that this summer.

21 COUNCILLOR GARDUNO: And, Mr. Chair.

22 This is complete soil excavation; in other

23 words, you're going to go trench and remove all that

24 soil?

25 COLONEL CONNELLY: That is correct.

5cbb4603-a9e9-463d-a599-2589072391b5


1 COUNCILLOR GARDUNO: And how far out into the

2 city, or just stay within base?

3 COLONEL CONNELLY: Mr. Chair, Councilman

4 Garduno, no, no. This is strictly within the confines

5 -- it's all on base and it's strictly within the

6 confines of along those lines where the old fuel lines

7 were from our previous system.

8 COUNCILLOR GARDUNO: So just in that vicinity?

9 COLONEL CONNELLY: Yes, sir. Yes.

10 COUNCILLOR GARDUNO: And then I wanted to ask

11 also about why aren't we removing liquid fuel?

12 COLONEL CONNELLY: Mr. Chairman, Councilman

13 Garduno, we -- by removing -- when you say why aren't

14 we removing liquid fuel, if you're referring to

15 sticking a well down there and starting to pump fuel

16 out, to do that, you've got to pump a lot of water

17 out. It's called pump and treat. And the technology

18 shows and the experience of the New Mexico Environment

19 Department and its difficult bureaus have shown that

20 it doesn't work very well.

21 The way to do it is to start drawing as much

22 vapor out as you can because you need to coax that raw

23 fuel to essentially turn into vapor so it will come

24 out. And there are methodologies by which we pump it

25 real hard and leave it sit for a second and let it all

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1 build back up, and then we pump it real hard again.

2 You know, we're creating a vacuum and we're coaxing it

3 out of it's liquid form into its gas form, and the

4 technology is such that it removes thousands of

5 gallons in short order.

6 Clearly, there -- I mean, it's estimated

7 there are millions of gallons down there, so, again,

8 this is the interim measure. We don't know what the

9 final remedy is going to be here, but our regulator

10 prefers the SVE, we prefer the SVE because we're just

11 going to get better results. The fuel is coming out

12 of the ground quicker, and, frankly, with less other

13 effects like, you know, discharge problems and

14 contaminated water problems coming up out of the

15 ground. This doesn't have all those problems and it

16 removes a lot more fuels. So this is the method we

17 prefer and we think we're on the right track.

18 COUNCILLOR GARDUNO: At what depths are you

19 doing this, do you know?

20 COLONEL CONNELLY: Yes. These wells were

21 drilled clear to the water table, because the fuel

22 sitting on the --

23 COUNCILLOR GARDUNO: So 500, 500 feet.

24 COLONEL CONNELLY: Yes, that's correct.

25 COUNCILLOR GARDUNO: Are there any pump that can

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1 do that, can draw from that depth? I was told that

2 250 is pushing any kind of pump.

3 COLONEL CONNELLY: Well, Mr. Chairman,

4 Councillor Garduno, your drinking water wells are

5 drilled far deeper than that, and they're pumping --

6 COUNCILLOR GARDUNO: No, no. For doing what you

7 want to do, do we have the technology and the soil

8 vapor extraction pumps that can do that, they can draw

9 from that far --

10 COLONEL CONNELLY: Oh, we absolutely do.

11 Absolutely. And in fact, as we -- it's essentially

12 going to be one big system that's going to be plumbed

13 to these different wells, and it's -- just to give you

14 an idea, it's going to move ten times the air that

15 just those internal combustion engine SVE units will

16 move. So it moves an incredible amount of air through

17 that unsaturated zone, which is pretty porous, and it

18 allows for the capture of those vapors to be brought

19 to the surface and treated.

20 COUNCILLOR GARDUNO: Now, from other

21 presentations, and I think I've heard it recently,

22 that a couple of the Kirtland Air Force Base water

23 wells, water supply wells were shut off. Is that

24 true? Do we know?


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1 Garduno, it's -- none of our wells are shut off as a

2 result of this, as a result of the bulk fuel plume.

3 COUNCILLOR GARDUNO: So you're still drawing

4 from 1 and 3.

5 COLONEL CONNELLY: We are.

6 COUNCILLOR GARDUNO: Aren't they in the --

7 COLONEL CONNELLY: I may need to correct the

8 record.

9 UNIDENTIFIED AUDIENCE MEMBER: The closest wells

10 are 3, 14 and 15.

11 COLONEL CONNELLY: Have we shut any down?

12 UNIDENTIFIED AUDIENCE MEMBER: 1 and 3 failed.

13 They're 50-year-old wells and we shut them down years

14 ago.

15 COLONEL CONNELLY: So I do not need to stand

16 corrected. So no wells were shut off as a result of

17 this fuel spill. Three is the one closest to it and

18 it, so far, is a non-detect for any constituents.

19 COUNCILLOR GARDUNO: All right. Another thing

20 is I wanted to say thank you for being at that meeting

21 last night at Cesar Chavez. The thing that was

22 disappointing to me was that only ten minutes was

23 allowed for questions, and I don't think people had an

24 opportunity to really ask the questions they wanted.

25 So I was wondering if we could someday separate DOE

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1 and Kirtland Air Force Base presentation so that, you

2 know, more time would be allowed for questions.

3 Because I think the community was disappointed,

4 understandably, that they didn't have the time to ask

5 some fairly pointed questions, I think, and some

6 questions that needed to be asked.


8 Garduno, you're not the first one I've heard that

9 from. Your point is taken, sir. And we do allow for

10 our citizens advisory board meetings to focus pretty

11 much exclusively on this subject, which are held

12 quarterly. But I take your point, sir.

13 COUNCILLOR GARDUNO: And then, Mr. Chair.

14 Colonel, did you say that NMED has not

15 approved some of permits that you've asked for?

16 COLONEL CONNELLY: They've not approved some of

17 our work plans, sir.

18 COUNCILLOR GARDUNO: So is that holding you up?


20 Garduno, no. We discussed the issue of the

21 containment system and we understand NMED's

22 methodology in delaying us from doing that. They want

23 the SVE units to do their thing and they want to see

24 what the plume does in response to those. It's

25 expected the plume is going to -- the plume is going

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1 to react very quickly to this. We expect some wells

2 on the periphery will start coming up below the MCLs.

3 I mean, it's just conjecture but we think the plume

4 may contract some. That's the theory. We're just

5 going to wait and see what happens.

6 If after we've seen the results of the soil

7 vapor extraction activity that we -- that it would be

8 prudent to install a containment system to halt the

9 migration of EDB from the plume, then that's something

10 we'll work with the NMED to address at that point.

11 COUNCILLOR GARDUNO: And your plans have in

12 them?

13 COLONEL CONNELLY: They do. Actually, sir, that

14 extraction well is already dug, it's already

15 installed. New Mexico Environment Department has

16 given us the go-ahead to perform what's called

17 enhanced well development on that, which will allow us

18 to examine the porosity of the surrounding strata so

19 we know how much water we're going to be able to pull

20 out of that thing.

21 So although they haven't said, no, you're

22 not doing it, and they said, no, you're not going to

23 turn it on, they haven't said you're not doing it all.

24 They've allowed us to proceed so that if and when that

25 decision eventually comes, that well is going to be

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1 ready immediately to turn on and start doing its

2 thing.


4 Colonel, do you think NMED understands the

5 gravity of this situation?


7 Garduno, I do. There's no question in my mind they

8 understand the gravity of this thing.

9 COUNCILLOR GARDUNO: Why would they not, I

10 wonder -- this is the conjecture on my part, and I

11 know that things don't happen in minute, especially in

12 government, but why would they not okay a plan they

13 would think would work to do something that is

14 absolutely necessary right now, not in a while or when

15 bureaucrats get a chance to look at plans, but right

16 now? We've heard, and I think you would agree,

17 estimates of eight million gallons, concerns that this

18 may not be able to be taken care of at the speed that

19 it's being dealt with, and concerns that if we don't

20 act, that we may be at a tipping point, at a place

21 where there's no turning back. Those Ridgecrest wells

22 will have to be closed off.

23 And i know that I asked the director and he

24 assured us that if they were closed off that we still

25 had plenty of other straws in the aquifer, but it

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1 seems to me that's not good science. And if this is

2 the biggest fuel spill in the country, not in the area

3 or in the last ten years, but in the country ever, I

4 would like that the Air Force would be putting every

5 single effort into making this and going somewhere

6 else, maybe EPA, to move NMED off the dime.


8 Thank you, Colonel.

9 CHAIRMAN SANCHEZ: There's still another

10 question, Colonel.


12 COMMISSIONER HART STEBBINS: Thank you, and I

13 apologize. First I wanted to say thank you, really my

14 sincere thanks, and I think from all of the board, for

15 being here tonight, and for Kirtland's addressing our

16 concerns. I think you have taken our concerns very

17 seriously, and Tom Berardinelli has always been very

18 responsive whenever we have a concern, a question, and

19 I think that we all feel that we are partners with you

20 in this. We share the same concerns, we share the

21 same goal, and it's certainly my intent to be as

22 supportive as possible. And you have always included

23 us at the table as a stakeholder when you're making

24 decisions about where to go next and I really

25 appreciate that.

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1 And at this point you include our staff at

2 the technical committee meetings. But I also

3 understand that you have what you call a tiger team

4 where you are making some technical decisions before

5 they get to the technical committee. Would it be

6 possible for our staff to be a part of that tiger

7 team, to be part of those discussions on, you know,

8 which way this is going to go?

9 COLONEL CONNELLY: Mr. Chairman, Commissioner

10 Hart Stebbins, that tiger team -- actually, the word

11 tiger team I believe is Secretary Martin's term. It

12 is NMED's tiger team with us. Don't know if that's

13 possible, but we will certainly raise that issue with

14 the New Mexico Environment Department and see what

15 they think.

16 COMMISSIONER HART STEBBINS: Well, thank you for

17 clarifying that. And I'll raise with the secretary as

18 well. So thanks again for being here.

19 Thank you, Mr. Chairman.


21 Thank you, Colonel, for your time.

22 COLONEL CONNELLY: Thank you.

23 CHAIRMAN SANCHEZ: Next item is Item B, the new

24 water conservation goal. And to make that brief

25 presentation will be Katherine Yuhas.

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1 MS. YUHAS: Mr. Chair, Members of the Board, I

2 heard that, brief presentation. Okay.

3 As you know from last month, we reached our

4 goal of 150 gallons per person, per day, and so now

5 we're in the process of figuring out what we'd like to

6 do for the next ten years.

7 And so for the next three months, I'll be

8 meeting with various stakeholder groups and getting

9 lots of input on where we want to go from here, what

10 do we to conserve for, how do we want to conserve,

11 what should the goal be, and I'll be analyzing those

12 approaches and putting together some presentations for

13 the public, along with surveys for the public to

14 complete.

15 Then we'll be holding public meetings from

16 July through December, district coalitions,

17 neighborhoods. We'll be having something online for

18 customers who can't get to a meeting. We'll have some

19 focus groups. All of that to generate the final

20 presentation at a town hall meeting next spring. From

21 that town hall meeting, we'll develop a conservation

22 plan for the next ten years and I will bring it to you

23 all sometime next spring for approval.

24 CHAIRMAN SANCHEZ: I wasn't expecting it to be

25 that brief.

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1 Are there any questions?

2 Thank you, Ms. Yuhas.

3 Next item is the water loss, the non-revenue

4 water presentation, and to make that presentation will

5 be Angelique Maldonado.

6 Welcome.

7 MS. MALDONADO: Thank you. Mr. Chair, Members

8 of the Board, my name is Angelique Maldonado. I am

9 the research analyst for the Water Authority. And I'm

10 going to be talking about our water balance and our

11 water audit in relation to non-revenue water. I'm

12 sure you all gave heard the term "unaccounted-for

13 water," which is the way that we used to gauge, or at

14 least it was a performance indicator for our

15 infrastructure efficiency. And recently we have

16 merged away from that and we are focusing a little

17 more on the non-revenue water. It's a little more of

18 an appropriate term and indicator.

19 So in terms of a water balance or water

20 budget, they're typically done on large scale,

21 according to a specific watershed. This water budget

22 and water audit is more focused on our distribution

23 system. It still takes into account inputs and

24 outputs. So to narrow the scope, we're going to focus

25 on our drinking water resource inventory, which is

5cbb4603-a9e9-463d-a599-2589072391b5


1 focusing on our well fields and our San Juan Chama

2 water.

3 So a little bit of history so you can be a

4 little bit more reassured that non-revenue water is

5 not something completely new that has not been tested.

6 In 1990, the United Kingdom developed and applied

7 these new policies and practices, which lead to

8 leakage reduction. Between '97 and 2000, and

9 International Water Association, in conjunction with

10 the American Water Works Association established the

11 best management practices for watering auditing

12 methodology. In 2003, the water loss control

13 committee advocated the use of this methodology in the

14 Journal of AWWA. Then in 2010 established their own

15 software that walks you through and outlines the

16 process of the water auditing methodology.

17 So performance indicators, the reason why we

18 went away from unaccounted-for water, it was only

19 based on two numbers, production and consumption, only

20 focusing or metered use. So there was a lot of margin

21 for estimating leakage and estimating numbers along

22 those lines, quantifying volumes that were just based

23 in large on estimates. So that was proven to be

24 obsolete and reliable and imprecise, and AWWA touches

25 on a form of gamesmanship where it reflect poorly on

5cbb4603-a9e9-463d-a599-2589072391b5


1 the water industries, where underestimate those leaks

2 can be detrimental to your system. So non-revenue

3 water is a more elaborate approach where they take

4 into account into apparent and real losses. Apparent

5 losses would be more on the line of metering and

6 accuracy data issues, or real losses, which are

7 physical losses, leaks and like breaks. And then it

8 also takes into account unbilled meter volumes and

9 unbilled unmetered volumes.

10 So to look at our production, you can see

11 here that we're focusing on our system totals for

12 groundwater production and drinking water production.

13 So I've just included 2010 and 2011 numbers here

14 because we just employed the 2010 numbers with the new

15 water auditing software.

16 Billed meter consumption, you can see that

17 there's a little bit of a difference in footprint.

18 2010, the explanation there was that was when we took

19 New Mexico Utilities under our wing and incorporated

20 all of those service points, so there was a little bit

21 of a jump in billing and then it kind of stabilized

22 and went back to our normal footprint.

23 So unbilled meter consumption focuses on

24 authorized usage where -- where we're allocating it

25 with arsenic treatment, surface water treatment, high

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1 hydrant flushing, pressure reduction whenever they're

2 going to work on a line, where they have to reduce the

3 pressure and turn on a hydrant, reservoir storage and

4 also reservoir drainage.

5 The graph here is just illustrating our well

6 wash. Every time we turn on one of our wells, it has

7 a run time to prime the pump, so there is an amount of

8 water that gets lost for operational purposes. So

9 even though it's non-revenue, it's still for

10 operational purposes.

11 Billed unmetered is going to focus on

12 customer billing inaccuracies, estimated accounts and

13 stocked meters. Unbilled unmetered is broken into the

14 two categories, which is authorized and unauthorized.

15 Authorized, we're focusing on firefighting, which is

16 on the order of -- well, at least in 2010, it was on

17 the order of 136 million gallons. And in 2011, it was

18 192 million gallons. And this is -- these modest

19 estimates, and really not even so much an estimate.

20 The way that we calculated these numbers were based on

21 the water audit methodology and their manual for loss

22 control programs.

23 Field operations, that would be considered

24 authorized, unbilled, unmetered, would be in the event

25 that we did have to open up a fire hydrant and we

5cbb4603-a9e9-463d-a599-2589072391b5


1 didn't put a meter on to meter the line. Unauthorized

2 would be theft, unreliable customer meter reads, meter

3 tampering, illegal use of hydrants, misuse of fire

4 lines, or employing a bypass on your meter.

5 So our water losses, as I said before are

6 broken down into apparent loses, which include theft,

7 metering inaccuracies and data handling errors. Real

8 loses are leaks and overflows, et cetera. So this is

9 going to give you a little idea of our loss prevention

10 and leak detection, where we focus on our metaloid

11 pipes and age of pipe, and then we also look at our

12 distribution failures in terms of line breaks and

13 leaks.

14 So this is the spreadsheet that is the

15 output from the water auditing methodology. So this

16 is from 2010 and it focuses on a kind of top-to-bottom

17 approach. So if you look in the left column, with out

18 own sources, it's going to focus on our drinking water

19 source, groundwater and surface water, and then it

20 starts to break it down in large by revenue water and

21 non-revenue water. And you can see how it gives us

22 the ability to parse out the volumes of data that are

23 known. So it's not so much like 14 percent

24 unaccounted for water.

25 So you can see here that in going through

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1 the process and incorporating all our metered use,

2 unmetered use and real losses and apparent losses, our

3 non-revenue water was down to 6.5 percent of

4 production, which is very good. In 2010, when the

5 AWWA put this software out, they invited us to

6 participate in statistical analysis and a survey where

7 we benefit because they validate our data. So it's

8 validated by a third party, and just that reassurance.

9 So 2011, the numbers similar from the

10 top-to-bottom approach. You can see here that our

11 non-revenue water did increase a little. It's at 8.2

12 percent, and mostly that is attributed to real loses

13 and apparent loses. And the real losses, which is

14 kind of encouraging, is that the real losses actually

15 decreased, but the apparent losses increased. So my

16 explanation for that is there is a little bit of lag

17 time when it comes to billing data. And in the event

18 there was a discrepancy on a customer meter reading

19 bill and they call it in, we verify, validate the

20 numbers, and if we have to go back and rebill, then if

21 it was our error and we overcharged, then we take the

22 loss. So that is where those metering inaccuracies or

23 billing inaccuracies come into play.

24 So long term, because the water audit

25 actually is not something that's just cut and dry, you

5cbb4603-a9e9-463d-a599-2589072391b5


1 know, done January 1st, it actually takes time, it's

2 an ongoing process, but it's just a reassurance that

3 we're taking the initiative to provide stewardship so

4 you can see and quantify the values and the volumes of

5 water and how we're applying them, and a little bit

6 more reassurance that it's not so much of

7 unaccounted-for water of 14 percent.

8 So that's the pepped of my presentation.

9 Any questions.




13 And maybe both of you can answer this. I

14 notice that you had fire hydrants or firefighting.

15 What kind of water are we using in fire hydrants

16 these?

17 MS. MALDONADO: The firefighting --

18 COUNCILLOR GARDUNO: I mean, is it potable water

19 or is it --

20 MS. MALDONADO: OH, it's potable water. We do

21 have some reuse hydrants that they use for just

22 strictly reuse purposes, but that's separate from our

23 distribution system.

24 COUNCILLOR GARDUNO: So I don't know, Mr.

25 Sanchez, is that an area that we ought to look at?

5cbb4603-a9e9-463d-a599-2589072391b5


1 Because I can't imagine -- I don't know what the

2 gallons of use it is, but if it's potable water, it

3 seems to me like nonpotable water would put out a fire

4 just as well.


6 I would agree, however, we have over 15,000 fire

7 hydrants. So piping nonpotable water to those

8 hydrants would be quite expensive and take quite a

9 long time.

10 COUNCILLOR GARDUNO: Right. But there must be

11 some distribution points that could be interrupted,

12 you know, and go to a fire hydrant as opposed to, I

13 don't know, residential, you know, commercial use.

14 I just -- you know, all the time that I've

15 been on the water board, that has been a nagging

16 question for me, why do we use absolutely pristine

17 water to put out a fire. And I don't know where we go

18 with it, but it's a question.

19 MR. SANCHEZ: I think we see more of the reuse

20 in our future in terms of parks and open space, and I

21 think the logical extension of that would be

22 evaluating some segment for firefighting as well.

23 COUNCILLOR GARDUNO: Thank you.


25 CHAIRMAN SANCHEZ: And I have one quick question

5cbb4603-a9e9-463d-a599-2589072391b5


1 regarding the non-revenue water from 2010 to 2011.

2 That went from 6.52 percent to 8.22 percent. How do

3 we compare to other parts of the country?

4 COUNCILLOR O'MALLEY: Regionally, other systems

5 that are participating in this methodology

6 specifically, they're on the order of 12 to

7 15 percent, so -- comparable to the system our size.

8 So we're going really well, we're doing really well.

9 And on a high note, when we had the third-party

10 validation, AWWA was pretty impressed with our rates

11 because they were regionally low, significantly low.

12 CHAIRMAN SANCHEZ: Do we have any other

13 questions for Ms. Maldonado?

14 Thank you very much for your presentation.

15 MS. MALDONADO: Thank you.

16 CHAIRMAN SANCHEZ: If there's no further

17 business before this Water Authority, this meeting is

18 adjourned.

19 (Proceedings adjourned at 7:38 a.m.)

20

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1 STATE OF NEW MEXICO

2 COUNTY OF BERNALILLO

3

4

5 REPORTER'S CERTIFICATE

6 I, Kelli Gallegos, New Mexico Provisional

7 Reporter, No. P-409, working under the direct

8 supervision of Paul Baca, NM CCR #112, do hereby

9 certify that I reported the foregoing proceedings in

10 stenographic shorthand and the pages are a true and

11 correct transcript of those proceedings and were

12 reduced to printed form under my direct supervision.

13 I FURTHER CERTIFY that I am neither

14 employed by nor related to any of the parties or

15 attorneys in this matter and that I have no interest

16 in the final disposition of this matter.

17

18

________________________________

19 KELLI GALLEGOS

Provisional License P-409

20 License Expires: 9/7/12

21

22

23

24

25

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